The Victorians left us an incredible legacy of water and sewerage infrastructure across England and Wales but modern approaches to regulation have struggled to stimulate continued water company investment in major upgrades or new infrastructure. It seems now that times are changing – new water and sewerage infrastructure is needed. Government and Ofwat are pushing companies hard to deliver major improvements in resilience.
But Government also recognise the scale of the task – the financial and regulatory hurdles which must be overcome. And so Government are trying to help where they can. In particular they are providing access to a consenting process – in the form of the Development Consent Order (“DCO”) regime – which is better fitted to the importance of and complexity inherent in delivering projects of this size and urgency.
Extreme weather conditions such as the “Beast from the East” and the extended dry summer mean that water resources have rarely been higher up the political and regulatory agenda. Government is challenging industry to deliver resilience through both new infrastructure and demand management.
The work of the National Drought Group draws together government departments, water companies and environmental groups in coordinated action to maintain water supplies and protect the environment.
Ofwat is working proactively with companies to drive improvements in performance following poor performance during the big freeze. Following its “Out in the Cold” report, companies have submitted their improvement plans which are being actively critiqued by the regulator.
Through PR19 Ofwat is also encouraging companies to allow the supply chain to compete, not just to supply equipment, but to use “Direct Procurement” in order to design, build, finance and operate major new infrastructure. At the recent event, Future of Utilities: Water 2018 both DEFRA and Ofwat challenged companies to deliver improved performance for customers in a range of areas.
The National Infrastructure Commission has also challenged Government and the regulator to go further and promote investment in a national water network and additional supply infrastructure aggressively over the period to the 2030s.
A Draft National Policy Statement was published for consultation on 29 November 2018. Once finalised this will represent the key policy document underpinning the DCO regime for the water sector. In particular it will: establish the policy framework for making consent decisions; establish a presumption in favour of consent for certain infrastructure for which there is an established need (the Water Resource Management Plan continuing to be key in identifying and satisfying the need); and provide guidance on the environmental and other considerations which will have to be assessed and presented in the decision making processes.
A DCO will be a powerful tool to deliver a nationally significant water infrastructure project. It can provide a one stop shop for fit for purpose development consents together with powers to access and acquire land interests compulsorily.
Due to the extent of powers which a DCO delivers and driven by a desire to provide robust consents, the process to obtain a DCO includes a significant degree of public consultation and public examination. The more “issues” which can be settled at a policy “plan” level, in the form of a well thought through NPS, the smoother that DCO application stage can be.
We therefore strongly encourage the sector to engage fully in the consultation process – carefully considering the questions raised and assessing whether the draft NPS will provide the right framework for delivering the improvements demanded. The consultation closes on 31 January 2019.
With thanks to my colleague Scott McCallum, a Shepherd and Wedderburn partner and expert in environmental and consenting law.