The Government is planning to streamline the complaints process for specialised infrastructure projects (SIPs), such as the Thames Tideway Tunnel, following a consultation.

The consultation by the Department for Environment, Food and Rural Affairs on the draft Water Industry (Specified Infrastructure Projects) Regulations 2014 ran for six weeks for six weeks between 28 July and 8 September 2014, and was issued to 324 contacts by email.

The Government specified the Thames Tideway Tunnel as an infrastructure project under the SIP Regulations in June  - this is the only infrastructure project to be specified to date.

Currently the SIP Regulations do not provide for an IP’s Project Licence to contain a condition allowing it to pursue an appeal to the Competition and Markets Authority (CMA) on any Ofwat determination, such as a price control decision, unlike a water and sewerage undertaker’s licence which does allow that.

In the absence of such a condition, the only route of challenge for a licensed IP against an Ofwat price determination would be by way of an application for judicial review to the High Court. This is a more limited form of appeal and is likely to be a lengthy process with corresponding associated costs.

The proposed amendment will bring Ofwat’s power to include conditions in an Infrastructure Provider’s project licence to refer disputes to the CMA into line with those already in place for water and sewerage companies. Defra said the change will contribute to keeping project costs down by reducing the perceived project risks of an appeal route to the CMA being unavailable, thus reducing rates of return sought by investors and resulting in lower customer bill impacts.

Without the proposed amendment, the only avenue of appeal would be by application for judicial review, the costs of which could be passed on to customers.

The Government now intends to proceed with finalising the draft Amending Regulations and lay them in Parliament for approval in 2015.

In its submission to the consultation, Thames Water said it was “fully supportive” of the proposed amendment to allow a licensed infrastructure provider to pursue an appeal to the CMA, commenting:

“We agree that this amendment is important to ensure that the cost of procuring the Project is kept as low as possible, as infrastructure providers will have the ability to refer matters to the CMA and therefore will not price any additional risk of adverse regulatory determination. The effect of this amendment will be to lower costs to our customers.”

The Consumer Council for Water expressed a similar view, saying that it agreed with the Government’s view that this should also help to keep the cost of procuring the IP as low as possible:

“By reducing the perceived risk this should lead to a lower rate of return being sought by investors and thus reduce the impact on customer bills. In principle, we welcome measures to avoid potential investors’ bids being inflated due to ‘pricing up’ of perceived risk.”

Defra received a total of five responses to the consultation from the following organisations:

• Competition and Markets Authority; and
• Consumer Council for Water.
• Mark Field MP
• Natural England
• Thames Water