Ofwat has introduced licence changes due to come into force early next year which will see all water companies’ licence obligations set out in clearer, more accessible language.

Working with the sector over the past year, Ofwat has identified a number of areas where licences can be simplified and streamlined, including removing conditions which are no longer relevant or don’t reflect the environment in which companies now operate.

The changes, which have been agreed by all companies with the water regulator, are intended to:

• Ensure that companies understand what is expected of them;
• Make it easier for Ofwat to determine whether companies are complying with their obligations; and,
• Allow stakeholders to more easily understand what it is that Ofwat holds companies to account for.

Water companies operating the public water networks hold an Instrument of Appointment (sometimes called a “licence”) as water undertakers, and those operating the public wastewater networks hold Appointments as sewerage undertakers, for the purposes of the Water Industry Act 1991.  

The changes are being made to the water companies’ Instruments of Appointment which set out: 

• the services the company must or may provide; and  
• the obligations that the company must comply with in delivering the services.  

The modifications are distinct from proposals on licence changes related to Ofwat’s Board Leadership, Transparency and Governance Principles, and bringing all companies’ licences up to the current best standard of ring-fencing, also the focus of a recent consultation.

Under Section 13 of the Water Industry Act 1991 Ofwat can modify the conditions of a company’s licence if it agrees to the changes Ofwat is proposing to make.

The licence changes will come into effect for most conditions on 1 January 2019, with Conditions F and N coming into effect on 1 March 2019.