Ofwat has decided to postpone the implementation of the new charging rules framework for new connection services provided by English water companies until 2018 - some stakeholders have expressed concerns that charges are too complex, unpredictable and unfair.

The decision follows consultation on the issue by the regulator earlier this year. The regulator consulted on its emerging thinking in March 2016, followed by a consultation in July on a new approach to connections charging for English water companies. The proposed approach was to use new powers introduced by the Water Act 2014 to move from the current legislative charging framework to a more flexible charging framework. The consultation on a new approach to connections charging also set out a proposed modification to Condition C (Infrastructure Charges) of English water companies’ appointments.  

The framework will not now be implemented from April 2017 - instead, Ofwat is considering introducing the new charging framework from April 2018.

Commenting on its decision, Ofwat said:

“Enabling a new connections charging framework that is clear and customer-centric is an important factor in ensuring trust and confidence in the sector. We need to ensure that charges enable and encourage efficiency, are fair and give certainty to suppliers and buyers. Some stakeholders have concerns with current arrangements – for example, that charges are too complex, unpredictable and unfair.”

The charging rules for new connection services will cover charges by English water companies to developers and other customers for:

• connections with water mains and public sewers;
• the provision of new water mains, public sewers and lateral drains; and
• pipe diversions.

The regulator says allowing additional time for the transition period would help by giving companies more time to consult with customers and respond to feedback before their charges are finalised.

 It would also give time for Water UK, the body which represents all the UK water companies, to explore the possibility of a more harmonised approach to implementation. According to Ofwat, this  would reduce the risk of arbitrary differences in companies’ implementation, whilst still allowing companies to introduce innovative tariffs.

As Ofwat has proposed to allow an additional year for the transition period, it now propose to remove the current restrictions on the maximum amount of infrastructure charges from 1 April 2018, instead of 1 April 2017.

Once Welsh guidance is published Ofwat will also consider developing new connections charging rules for Welsh water companies.

Deadline for comments is 7 November 2016 – email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

In terms of implementation date, Ofwat then plans to finalise and publish rules later this year, subject to any further input and evidence being provided by stakeholders or by Defra’s final guidance.

Ofwat said it will continue to work with stakeholders to ensure the new framework is well understood and further consider how regulatory tools can be used to ensure appropriate implementation.