Utility Week expert view: Karma Ockenden

“Wales is determined to carve out its own identity on water, to look after its own interests and play to its own strengths rather than slavishly follow Westminster.”

Although it may not be as headline-grabbing as Scotland’s imminent independence referendum, in water and energy terms Wales is also making significant moves to become master of its own destiny.

Last week the Welsh Government launched its Green Growth Wales prospectus – a neat package of measures to lure green business to its shores with a view to building a new economy around sustainable use of the country’s natural resources. Key to the package is Natural Resources Wales, a new environmental one-stop-shop (see interview with chairman Peter Matthews, page 8).

A separate but closely related document which closes for consultation today [4 July] is A Water Strategy for Wales. This long-awaited issuance sets out how the Welsh Government intends to manage water resources to support communities and business; drive green growth; ensure resource efficiency; enhance resilience and diversity; and tackle poverty. There is a real sense that the country is determined to carve out its own identity on water, to look after its own interests and play to its own strengths rather than slavishly follow Westminster.

The headline call is for the conferral of full legislative competence on the National Assembly in relation to all matters relating to water and sewerage. In 1999, Wales achieved devolution for a number of areas, including water supply, water resources management, water quality, the representation of water consumers, flood risk management and coastal protection. However, there are significant gaps in the powers of the National Assembly in relation to aspects of water policy, particularly economic regulation, as well as in relation to sewerage.

A related strand is the plan to redraw the regulatory boundary between England and Wales so that it is aligned with the geographical boundary. At present, Welsh ministers have responsibility for water companies operating wholly or mainly in Wales (Dwr Cymru Welsh Water, Albion Water and Dee Valley Water) and the UK government has responsibility for water companies operating wholly or mainly in England (Severn Trent Water and Scottish and Southern Water). The three incumbent companies have operational areas that cross the border between Wales and England.

There is no direct suggestion in the Water Strategy that aligning the regulatory boundary with the geographical boundary would do any more than tidy up a messy, out-of-date situation and “avoid conflicting policies of the different regulators and water companies which might arise under the current regulatory system”. Indeed, the Welsh Government is currently working on a strategic policy statement for Ofwat, which will set out the strategic framework and priorities for the regulator to follow.

However, a neat Wales/England regulatory/geographical boundary would open the door to the possibility of regional regulation. Indeed, the Welsh Government has commissioned research (to be published later this year) to assess the current regulatory and legislative framework. The research will also explore alternative options to “ensure customers in Wales receive the best service within the context of our wider policy aims”.

Many other strands of the Water Strategy also show growing independence of mind. A few examples are:

•    putting a value on water and allowing the economic value of water to help determine its best use;

•    catchment policy extension: developing an area-based approach to natural resource management;

•    universal metering: consulting on metering all water supplies, within a framework of innovative tariff structures, including social tariffs;

•    landlord liability: following recent consultation on draft regulations which would require landlords to provide details of their own name and address along with tenant details to the relevant water company, regulations will be put forward later this year to help companies to reduce the level of debt owed to them;

•    retail competition: the Welsh Government has rejected retail competition for all businesses. Instead it is undertaking a review of business customer requirements in Wales;

•    consumer representation: companies should make the sort of customer engagement and research undertaken for PR14 part of business as usual. Also, after PR14 the Welsh Government will determine the most appropriate mechanism for consumer representation in Wales. This could extend beyond focusing on the bill-payer only, given that water is a vital natural resource. Promoting greater civic interest and involvement in water planning and management is on the cards.

In these heady days of independence and swelling national identity north of the border, it seems perfectly reasonable for those west of it to want to become masters of their own destiny on the matter of a critical natural resource – water. Should the Welsh Government succeed in winning total control of water and sewerage policy, and in aligning the regulatory boundary with the land one, it will be free and able to realise its water strategy for Wales.