Water & Wastewater Treatment Magazine
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18 | JANUARY 2018 | WWT | www.wwtonline.co.uk The Works: developer services • NEW CHARGES EXPLAINED • Ofwat's new rules on charging come into force in April 2018. Before then, water companies are expected to consult on and then publish their own charging arrangements which are compliant with the requirements, and make them easily available on their websites. • They must distinguish clearly between charges that are associated with contestable work (which could be carried out by providers other than the water company) and which are for work that is non-contestable. • Requisition charges, which are charges for laying water mains or mains sewers on a development site, are contestable. In their charging arrangements, water companies must set out a schedule of upfront fixed charges that enables developers to calculate what the requisition charges will be for their site. The developer can then measure these likely costs against competitive options such as a self-lay provider or NAV (new appointments and variations). • To enable a direct comparison, the water company must also publish a fixed, upfront cost for the connection charges made when they adopt pipes and sewers laid by somebody else. Any asset payment or discount made the other way must be kept separate • Requisition and connection charges must not include the cost of work to enhance supply or reinforce the network away from the site. These off-site works must be funded by the infrastructure charge, a non-contestable, fixed fee gathered from all new connections in a region. Water companies must demonstrate to Ofwat that they are using all the money from these fees on necessary enhancements SALLY IRGIN, DIRECTOR OF ENFORCEMENT, OFWAT D eveloper services has been a key area we have been con- centrating on at Ofwat for the last three years; but when we started this journey back in 2014, it was a pretty bleak space. Companies had a very limited view of their activities in this field and didn't really recognise developers as customers. There was also a real inconsistency in the level of service pro- vided by companies to developers, both in terms of timing and in the quality of customer experience. New connections was one of the first areas of the water sector to have an element of competition, and self-lay organisations are key to that. However, there is a north-south divide in terms of the take-up of self-lay in the country. Of course there are a whole range of factors that sit behind that, economic and regional is- sues, but there is also something about company behaviour that makes that market more effective in some areas than others. The problems weren't limited to water companies - there was also a challenge for Ofwat in that the vast majority of work we were doing on developer services was on casework, dealing with disputes that came to us, rather than it being a considera- tion that cut across our organisation. With housing being a big priority for the government, there was a feeling that we had to address this. We wanted to put the spotlight back on to devel- oper services and to make sure we were using the range of tools at our disposal to get companies to step up to that challenge. The charging rules and the code for adoption are the more formal pieces of work that we've done, and they both fall under the new legislation of the Water Act 2014. The charging rules piece is particularly important as it gets to the heart of why we used to get a lot of disputes in this area: current charging arrangements are complex, a bit unpredictable, and at times un- fair. We have issued our rules for new connections for England for Wales, and companies at the moment are developing their individual charging schemes to fit in within this framework. The new charges should be clear and predictable, and avoid the need for so much back and forth between water companies and developers. But we have also engaged the so‹er tools that we've got: on levels of service, we challenged the sector to develop a set of metrics on levels of service that they would report on, and they've been doing that quarterly through Water UK since April 2015. The quantitative elements contained in those metrics cre- ate a 'league table' which is a powerful reputational incentive. The methodology for the next price review also includes a new measure called DMEX, which is the qualitative element of developers' customer experience. It will be based on a customer satisfaction survey, and will be the first time that there will have been a clear incentive within the price control that's related to developer services, with penalties and rewards attached to it. That all helps to reinforce with senior managers within water companies that this is an important area. The final strand of what we've been doing is around planning for growth: we've been using our informal powers to make it clear to companies that we expect them to be proactively engag- ing with local authorities and with other infrastructure providers to make sure they really understand the future development pipeline in their area and the associated planning, so there are few big surprises for either developers or the company in terms of their requests to connect to the network. • REGULATOR VIEW: