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WATER AND SEWERAGE SERVICES (AMENDMENT) BILL

EXPLANATORY AND FINANCIAL MEMORANDUM

INTRODUCTION

  1. This Explanatory and Financial Memorandum has been prepared by the Department for Regional Development in order to assist the reader of the Bill and to help inform debate on it. It does not form part of the Bill and has not been endorsed by the Assembly.
  2. The Memorandum needs to be read in conjunction with the Bill. It is not, and is not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require an explanation or comment, none is given.

BACKGROUND AND POLICY OBJECTIVES

  1. The Water and Sewerage Services (Northern Ireland) Order 2006 (the 2006 Order) came into force on 1 April 2007 providing for an "undertaker" to provide water and sewerage services in Northern Ireland. Northern Ireland Water Limited (NIW) – was appointed as the sole water and sewerage undertaker for Northern Ireland. The company is 100% owned by the government (with DRD as the sole shareholder). It took over from the DRD's Water Service Agency on 1 April 2007.
  2. Under Article 213(3) of the 2006 Order the Department has the power to make grants to the undertaker equal to the amount of discounts provided to consumers in the initial period. The initial period is 3 years from the coming into operation of the 2006 Order (Article 213(4)) – the period during which the previous Administration intended to phase in new water and sewerage charges. This provision runs out on 31 March 2010 which means that DRD will no longer be able to make these subsidy payments to NIW.
  3. Although no decision has as yet been taken about the future funding of water and sewerage it is essential to ensure that subsidy can be paid to NIW beyond the initial three year period set out in the 2006 Order. In light of the Executive’s decisions to defer domestic water and sewerage bills the payment of this subsidy to NIW is essential to the financial stability of the company. If DRD did not continue to provide these subsidy payments, NIW would be unable to fund the delivery of water and sewerage services.
  4. The aim of this Bill is to ensure that DRD can continue to make these subsidy payments to NIW for a further three years.

CONSULTATION

  1. The Bill is technical in nature in that it simply provides for an extension of the current powers to subsidise NIW and therefore no consultation has been undertaken.

OPTIONS CONSIDERED

  1. There is no other option available apart from the “do nothing” option which would not allow the stated policy aim to be achieved.

OVERVIEW

  1. This Bill will amend Article 213 of the 2006 Order to enable DRD to continue to make subsidy payments to NIW while domestic payments for water and sewerage services continue to be deferred.

COMMENTARY ON CLAUSES

This Bill consists of two clauses; the first clause deals with the substance of the Bill and amends Article 213(4) of the 2006 Order. The definition of initial period in Article 213(4) is amended to extend its duration for a further three years. The second clause in the Bill deals with the short title of the Bill.

FINANCIAL EFFECTS OF THE BILL

  1. The financial effects of the Bill will be determined by decisions of the Executive on the introduction or deferment, in whole or in part, of new payments for water and sewerage services . The Bill will effectively enable DRD to meet any gap in NIW’s funding requirements where the full economic cost of water and sewerage services is not charged directly to consumers in the 2010-2013 period.

HUMAN RIGHTS ISSUES

  1. The provisions of the Bill are considered compatible with the Human Rights Act 1998.

EQUALITY IMPACT ASSESSMENT

  1. The need for an Equality Impact assessment has been screened out as this is an extension of an existing policy.

SUMMARY OF THE REGULATORY IMPACT ASSESSMENT

  1. No effect on this area.

LEGISLATIVE COMPETENCE

  1. The Minister for Regional Development had made the following statement under section 9 of the Northern Ireland Act 1998:

“In my view the Water and Sewerage Services (Amendment) Bill would be within the legislative competence of the Northern Ireland Assembly.”