Page 8 - Lawtext Utility Law Review Journal Sample

ARTICLE 16[2006/2007]4 ULR MARKET LIBERALISATION & REGULATION IN SCOTTISH WATER SERVICES – HENDRY 155

33
of the Water Framework Directive and a new, state of the art Commissioner and the Executive wished to see harmonisation
system for integrated water use licences; but in water services, of charges across Scotland.
28
the law remained – and remains – fragmented. In the early years of the new parliament, there were
WISA, and then the Water Environment Act 2003, were multiple and overlapping consultations and inquiries into
followed by the Water Services etc (Scotland) Act 2005, which aspects of water. In 1999, the Executive began to establish the
completed the suite of primary water legislation. The 2005 new system of economic regulation, with a ‘strategic review
Act replaced the Commissioner with the WICS, significantly of charges’, that is, the price determinations, undertaken by
increased the WICS’ powers, and brought in the licensing the WIC. This is equivalent but not identical to the Periodic
regime for new entrants, which has attracted so much comment. Review of charges in England, and in Scotland there is a four-
Before examining these newest reforms, it might be helpful to year review period. As part of this process, the Executive has
say a little more about the rationale – economic, as well as also undertaken successive consultations into appropriate and
political – for the establishment of one single public provider acceptable levels of service and charges, the ‘Quality and
from the regional authorities. Standards’ (‘Q&S’) process, which has focused on investment
needs for the industry. The first interim consultation was
34

followed by an interim determination for the period 2000 to
Scottish Water – Open for Business 2002. Quality and Standards 2 ran concurrently with the first
35
36
Water services under the regional councils that preceded the full charging period, from 2002 to 2006 and at the time of
new water authorities are generally agreed to have suffered writing SW is midway through the third price determination
29
from years of underinvestment, not unusual where water period, from 2006 to 2010. However, Q&S3, on investment
37
services are provided by local governments with many pressing priorities, is running from 2006 to 2014, through two price
38
priorities. Such lack of investment took place concurrently with determinations by the WICS, each of which is supported by
the introduction of EC water and environmental directives Executive consultations on ‘Paying for Water Services’ for 2006
39
necessitating heavy expenditure in water and particularly waste to 2010 and now 2010 to 2014. 40
30
water treatment plants. In his first strategic review of charges, At the same time, the Executive was also consulting on
the then Commissioner Alan Sutherland assessed the backlog the underlying structure of the industry in Scotland, and in
31
of investment at £2.5 billion. Securing efficiencies of scale 2001 they suggested, inter alia, creating a single unitary provider
41
in the drive to secure this investment was one factor in the for the whole of Scotland. Considerable further support was
decision to move to a single Scottish-wide service provider, given to this suggestion by the Commissioner’s second strategic
42
but there were others. review of charges, for the Q&S2 period, which indicated that
Scotland has a relatively low population density (65 persons if the three authorities were retained, prices would rise in real
2
per km , compared to 382 persons per km in England) and terms by between 23 and 31 per cent. If there was a single
2
much of that is concentrated in the central belt. Not all of the
rural population is served by the public provider; some 3 per
cent are served by private water supply and rather more by
32
private sewerage, mainly septic tanks. All three authorities 33 The Scotland Act 1998, Note 5 above, established a ‘Scottish
operated a harmonised charging structure for domestic Executive’. Following the 2007 elections, since when the SNP has formed
customers within their areas, so that rural customers were not the administration, the Executive rebranded itself the ‘Scottish
penalised, but charges were not uniform across Scotland and Government’.
were rising fastest in the North; the North of Scotland Water 34 Scottish Executive 1999 Water Quality and Standards: Investment Priorities
Authority had a particularly diffuse rural population with for Scotland’s Water Authorities 2000–2002 (Q&S1) available at http://
www.scotland.gov.uk/library2/doc06/wqs-00.htm last accessed 15 May
relatively few large commercial customers. Both the 2008.
35 WIC 2001 Strategic Review, Note 31 above.
36 Scottish Executive 2001 Water Quality and Standards 2002-2006 A
Consultation (Q&S2) available at http://www.scotland.gov.uk/consultations/
environment/wqas-00.asp last accessed 14 May 2008.
37 Scottish Executive 2004 Investing in Water Services 2006–2014 (The Quality
and Standards III Project) A Consultation (Q&S3) available at http://
the Framework: the Water Environment and Water Services (Scotland) www.scotland.gov.uk/consultations/environment/iiws-00.asp last
Act 2003’ Water Law 14[2003] 16; and more recently, Clarke, B 2006 ‘ accessed 10 June 2008.
Water Law in Scotland: the Water Environment and Water Services 38 For all of the WIC documentation for the price determination of
(Scotland) Act 2003 and the European Convention of Human Rights’ 2006-10, see http://www.watercommissioner.co.uk/view_Price_Setting_
EdinLR Vol. 10 60–101. 2006-10_Pubs.aspx last accessed 18 May 2008; and for the early
28 Water Environment (Controlled Activities) (Scotland) Regulations consultations and publications relating to 2010-2014, see http://
SSI 2005/348. www.watercommissioner.co.uk/view_Price_Setting_2010-14_Pubs.aspx
29 See, for example, J Sawkins and V Dickie, ‘Regulating Scottish Water’ last accessed 10 June 2008.
Utilities Policy Vol. 8(4) 1999, 223-46, section 3. 39 Scottish Executive 2004 Paying for Water Services 2006–2010 A
30 Especially, the Bathing Waters Directive, Note 14 above; the Urban Consultation available at http://www.scotland.gov.uk/consultations/
Waste Water Treatment Directive, Note 13 above; the Drinking Water environment/pfws-00.asp last accessed 10 June 2008.
Quality Directive 1980/778/EEC, now 1998/83/EC; and the Dangerous 40 Scottish Government 2007 Paying for Water Services 2010–2014: A
Substances Directive 1976/464/EEC. Consultation on the Principles of Charging for Water Services available at http:/
31 Water Industry Commissioner 2001 Strategic Review of Charges /www.scotland.gov.uk/Publications/2007/11/22142050/0 last accessed
paragraph 1a ‘Critical Issues The Issue of Backlog’. This document is 10/6/08.
no longer available on the WIC website but may be obtained on request 41 Scottish Executive 2001 The Water Services Bill the Executive’s Proposals
from http://www.watercommissioner.co.uk/ . available at http://www.scotland.gov.uk/Publications/2001/03/8747/
32 Scottish Executive 2005 The Draft Private Water Supplies (Scotland) File-1 last accessed 15 May 2008.
Regulations 2005 and Proposals for a Private Water Supplies Grant Scheme - A 42 WIC 2001 Strategic Review of Charges 2002-2006 available at http://
Consultation available at http://www.scotland.gov.uk/Publications/2005/ www.watercommissioner.co.uk/view_Price_Setting_2002-06_Pubs.aspx
03/20902/55270 last accessed 14 May 2008. last accessed 14 May 2008.

UTILITIES LAW REVIEW PUBLISHED BY LAWTEXT PUBLISHING LIMITED
www.lawtext.com