Section 40: Bulk supplies., Water Industry Act 1991

This section applies where—

a qualifying person requests a water undertaker to provide a supply of water in bulk to the qualifying person, or

a water undertaker proposes such an arrangement;

and references in this section to the supplier are references to the water undertaker who is to provide the supply of water.

In this section "qualifying person" means—

a water undertaker;

a person who has made an application for an appointment or variation under section 8 which has not been determined.

On the application of the qualifying person or the supplier, the Authority may—

if it appears to the Authority that it is necessary or expedient for the purposes of securing the efficient use of water resources, or the efficient supply of water, that the supplier should give a supply of water in bulk to the qualifying person, and

if the Authority is satisfied that the supplier and qualifying person cannot reach agreement within a reasonable time,

by order require the supplier to give and the qualifying person to take a supply of water in bulk for such period and on such terms and conditions as may be specified in the order.

Before making an order under subsection (3), the Authority must consult the appropriate agency, in particular about whether the proposed supply of water would secure an efficient use of water resources, taking into account the effect on the environment of the proposed supply.

Subject to subsection (6), an order under subsection (3) has effect as an agreement between the supplier and the qualifying person.

If the Authority makes an order under subsection (3) that affects a person who is a qualifying person by virtue of subsection (2)(b), the Authority must frame the order so that it does not have effect until—

the person becomes a water undertaker for the area specified in the order, or

the person becomes a water undertaker for an area that includes the area specified in the order (in the case of a water undertaker applying for a variation).

Neither the CMA nor the Authority may exercise, in respect of an agreement for the supply of water in bulk by a water undertaker to a qualifying person, the powers conferred by—

section 32 of the Competition Act 1998 (directions in relation to agreements);

section 35(2) of that Act (interim directions).

Subsection (7)(b) does not apply to the exercise of powers in respect of conduct—

which is connected with an agreement for the supply of water in bulk by a water undertaker to a qualifying person, and

in respect of which section 35(1) of the Competition Act 1998 applies because of an investigation under section 25 of that Act relating to a suspected infringement of the Chapter 2 prohibition imposed by section 18(1) of that Act.

In exercising its functions under this section, the Authority must have regard to the desirability of—

facilitating effective competition within the water supply industry;

the supplier's recovering the expenses of complying with its obligations by virtue of this section and securing a reasonable return on its capital;

the supplier's being able to meet its existing obligations, and likely future obligations, to supply water without having to incur unreasonable expenditure in carrying out works;

not putting at risk the ability of the supplier to meet its existing obligations, or likely future obligations, to supply water.

In this section and section 40A "the appropriate agency", in relation to a determination whether to make an order under subsection (3) or section 40A(1) which would result in, or which would vary or terminate, a bulk supply agreement, means—

the Environment Agency, in a case where all parties to the bulk supply agreement are or would be—

a water undertaker whose area is wholly in England, or

a person who would, if the person's application for an appointment or variation is determined in accordance with the application, be such a water undertaker;

the NRBW, in a case where all parties to the bulk supply agreement are or would be—

a water undertaker whose area is wholly in Wales, or

a person who would, if the person's application for an appointment or variation is determined in accordance with the application, be such a water undertaker;

both the Environment Agency and the NRBW, in any other case.

In this section and sections 40A to 40J "bulk supply agreement" means an agreement with one or more water undertakers for the supply of water in bulk and includes—

an order under subsection (3) which is deemed to be an agreement by virtue of subsection (5), and

any agreement which has been varied by order under section 40A(1).

Section 40: Bulk supplies.

Discussed in

About this text