Section 40A: Variation and termination of bulk supply agreements., Water Industry Act 1991

On the application of any party to a bulk supply agreement, the Authority may—

if it appears to the Authority that it is necessary or expedient for the purpose of securing the efficient use of water resources, or the efficient supply of water, that the bulk supply agreement should be varied or terminated, and

if the Authority is satisfied that variation or termination cannot be achieved by agreement within a reasonable time,

by order vary or terminate the bulk supply agreement.

Before making an order under subsection (1), the Authority must consult the appropriate agency, in particular about whether the proposed variation or termination of the bulk supply agreement would secure an efficient use of water resources, taking into account the effect on the environment of what is proposed.

If an order under subsection (1) is made in relation to a bulk supply agreement, the agreement—

has effect subject to the provision made by the order, or

ceases to have effect (as the case may be).

An order under subsection (1) may require any party to the agreement to pay compensation to any other party.

Neither the CMA nor the Authority may exercise, in respect of an agreement to vary or terminate a bulk supply agreement, 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 (5)(b) does not apply to the exercise of powers in respect of conduct—

which is connected with an agreement to vary or terminate a bulk supply agreement, 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 expenses incurred by the supplier in complying with its obligations under the bulk supply agreement in question and 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 sections 40B to 40J—

"qualifying person" has the meaning given by section 40;
"supplier", in relation to a bulk supply agreement, means any water undertaker which is required by the agreement to provide a bulk supply of water.

Section 40A: Variation and termination of bulk supply agreements.

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