Ofwat has launched a new consultation on the regulatory framework for the infrastructure provider that will deliver the Thames Tideway Tunnel Project.
The regulator is seeking comments on the following suite of draft regulatory documents that are intended to regulate any infrastructure provider appointed to deliver the Thames Tideway Tunnel Project.
- A draft Project Licence that Ofwat will issue to the infrastructure provider.
- Draft economic guidance that we will issue, setting out how Ofwat intends to regulate the infrastructure provider.
- A draft explanatory note that Ofwat will issue jointly with the Environment Agency, setting out how both regulators are likely to apply existing enforcement policies in the context of the Thames Tideway Tunnel Project.
Ofwat has set out:
- an overview of the regulatory framework for specified infrastructure projects;
- a summary of the purpose of the regulatory documents on which it is consulting;
- the process that will be followed before granting the Project Licence;
- a series of consultation questions; and
- a proposed timetable
The Thames Tideway Tunnel Project , described by Ofwat as of “unprecedented scale, size and complexity in the water sector in England and Wales”, will be the first project to be delivered under a new regulatory framework.
Introduced by the Flood and Water Management Act 2010, the new framework allows the Secretary of State or Ofwat to specify certain infrastructure projects which must be put out to competitive tender by the incumbent water or sewerage undertaker and which preclude them from undertaking the project itself other than in relation to certain preparatory work.
The successful company that is awarded the tender will be designated as an ‘infrastructure provider’ (IP) to be directly regulated by Ofwat under the terms of a newly-established ‘Project Licence’.
This is the first Project Licence Ofwat will issue under the Regulations which covers three distinct phases to the Project.
- The first is the design, financing and construction of the tunnel.
- The second is a transitional phase, when the tunnel has been built, but its operation is still being tested, and the first periodic price review for the IP has not yet been carried out.
- The third is when the tunnel is fully operational.
The Project Licence will be in place from the start of the construction period and will remain in place in perpetuity unless amended or revoked.
Ofwat will conduct a review to determine if shortlisted bidders in the IP procurement are competent bodies to hold a project licence. This will be an entirely separate but parallel process to that being carried out by Thames Water to procure an IP to deliver the Thames Tideway Tunnel. Once Thames Water has announced its preferred bidder for the Project, it is envisaged that Ofwat will designate the preferred bidder as an IP and will then conduct a further consultation before granting a project licence to the designated IP.
The indicative timetable set out by Ofwat is as follows:
7 October 2014 to 4 November 2014 Consultation on Project Licence and other regulatory documents.
November 2014 – April 2015 Short-listed bidders will submit information to Ofwat as part of an application for a Project Licence, and Ofwat will carry out an assessment of whether short-listed bidders are competent bodies to hold a Project Licence.
February 2015 Ofwat to review comments on Project Licence and regulatory documents and issue final documents to bidders.
May 2015 Thames Water will announce the preferred bidder for IP
May – June 2015 Ofwat will consider designating the preferred bidder as an IP under the SIP Regulations and will consult on a proposal to grant a Project Licence to the designated IP. As part of the consultation, a final Project Licence and final versions of the economic guidance and explanatory note on enforcement will be published.
July 2015 Financial close of the procurement and Project Licence award.
Deadline for responses to the consultation is by close of business on 4 November 2014. Click here to access the consultation documents.
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