Director General of Water Services (Hansard, 24 January 1990)

§ Mr. Heathcoat-Amory

The Director General of Water Services' powers to protect consumers are set out in the Water Act 1989 supplemented by the water and sewerage undertakers' instruments of appointment. Under section 7 of the Act he must exercise his powers so as to secure that the functions of water and sewerage undertakers are properly carried out and that appointed companies are able to finance the proper carrying out of those functions. Subject to these general duties, he is subject to specific duties to protect consumers, to promote economy and efficiency and to facilitate competition.

Under section 6 of the Act the director general must establish up to 10 customer service committees and must allot each appointed company to one of those committees. It is the director general's intention to establish 10 customer service committees as soon as possible. The committees must keep under review all matters affecting customers' interests, consult and make representations to the companies, investigate those customer complaints within their remit and report to the director general on their activities in each financial year on any matter affecting the interests of customers or as required by the director general.

The director general has a duty to consider any complaint that the customer service committee is unable to resolve and any allegation that a committee is in breach of its duty, to consider any complaint asserting a contravention of any condition of an undertaker's appointment or any other requirement enforceable under section 20 of the Act, which he decides not to refer to the Secretary of State, and to take such steps as he considers appropriate.

The director general is also responsible for administering the regulatory system established under the Act and set out in the companies' instruments of appointment, which provides significant safeguards for consumers in relation to charges for water and sewerage services and to standards of service, and protects consumers from abuse of monopoly power.

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The main provisions of the conditions of appointment are Limits on increases in charges. These may be adjusted by the director general in certain circumstances and reviewed periodically in the light of the principles set out in section 7 of the Act; A prohibition on undue discrimination between classes of customers or potential customers so that, for example, domestic and industrial consumers both pay their fair share; A requirement to submit audited accounts which, among other things, enable the director to protect the customer from cross subsidy between the appointed business and other businesses or companies in the group; Requirements as to the procedures to be followed before a domestic customer may be disconnected for non-payment of charges and for dealing with leakage with respect to metered domestic customers, and requirements to prepare, submit to the director for approval, and publish code of practice for relations with customers and the customer service committees, for disconnection procedures and for liability for changes in the event of leakage; A requirement to report performance against specified customer service indicators, to set targets for three key indicators of service—pressure of mains water, interruptions to water supplies and foul water flooding—and to make available to the public information on performance against these indicators. The director may vary the matters on which companies are required to report. Where performance is unsatisfactory he may ask the Secretary of State to make regulations under sections 38 of 68 to the Act to lay down standards of performance enforceable under the Act; Procedures to ensure that the best value is obtained from the sale of any surplus land and that the customer benefits from the proceeds; A requirement that the assets needed for the carrying out of the statutory water and sewerage functions remain available to the company, and a requirement to prepare, keep up to date and submit to the director an underground asset management plan to enable him to satisfy himself that the maintenance of long term assets is not being neglected.

The director has wide-ranging information powers under the Act and the instruments of appointment to monitor the performance of companies. Should a company be in breach of its appointment conditions the director general may take enforcement action under section 20 of the Act.

The director general is not responsible for regulating the quality of water supplied to customers or the quality of sewage discharges. Those are matters for other regulatory bodies but the director general has powers to ensure that the charges paid by consumers properly reflect the expenditure required to provide a satisfactory performance standard.