The proposal forms part of a new consultation launched by the Agency on its charging proposals for Environmental Permitting, abstraction and Emissions Trading charging schemes from 2012-2015.
The Agency is seeking views from charge payers, trade associations and other interested parties on its major proposals which are:
- No change to the rate of charges for the majority of charge payers for two years with a check at the end of the first year (this does not include abstraction charges)
- A small number of technical changes that are largely beneficial to industry
- A small increase in charges in year 3.
- An increase in abstraction charges each year to fund specific cost pressures.
The Environment Agency has powers under legislation to recover the costs of some of its services. Under the powers people and organisations who require an environmental permit pay for the cost of the service, rather than funding from general taxation.
The Agency is now proposing an annual 10% uplift for its Environmental Improvement Unit Charge (EIUC) charges under the abstraction licensing scheme.
EIUC is required to generate the funding to compensate licence holders whose permits need to be modified where they are unsustainable. To moderate the impact on existing abstractors it was agreed, following consultation, that increases would be capped at 10% calculated on the sum of the Standard Unit Charges and the EIUC.
There are two major cost pressures in particular the Agency needs to address:
- An environmental improvement at Llyn Brianne reservoir that may require an increase in the EA Wales SUC charge by 4.5% in each of the next three years.
- A requirement to fund an annual return on investment based on the retail price index in the Operating Agreement the Agency has with Northumbrian Water for Kielder Reservoir.
Until 2001 most water abstraction licences were granted without a specific time limit. This, combined with changes in environmental standards, mean that a proportion of the 20,000 abstraction licences are now considered to be unsustainable. While the Agency has implemented a programme to address environmentally damaging licences, under current legislation licence holders are entitled to compensation for changes made to their permits.
Based on this, the Agency is now proposing to increase charges, as previously, by up to the agreed 10% SUC/ EIUC cap over the period 2012 to 2015.
Unlike previous years where the Agency has consulted on its charging schemes for the next 12 months, the consultation this time covers a three year period from 2012 to 2015.
Other factors that may impact on the Agency’s charges over the next few years include:
- A possible new environmental body for Wales: Welsh Government is looking into the possibility of creating a new environmental body for Wales. If this goes ahead, the new body will be in place before the period covered by this consultation expires (before March 2015).
- Government Reviews: These include the Cave and Walker Reviews and any Water White paper that may follow.
In addition the Agency will need to recover the costs associated with the depreciation and rate of return on the investment programme for eel and fish passes and screens and could also face significant additional work associated with assessing and determining previously un-regulated abstraction (New Authorisations).
The Agency said the costs associated with these could be significant - and reserves the right to re-consult on Water Abstraction charges if necessary if the costs are significantly larger than its efficiency savings.
Deadline for submissions to the consultation, which runs for 12 weeks, is 21 December 2011.
The Environment Agency plans to issue a consultation in 2013-14 outlining a more strategic approach to charges going forward which will be used to inform the next spending review. The Agency said this will also provide an opportunity for early input from charge payers on any proposed changes that are planned to be introduced from April 2015.
Click here to access the consultation documents.
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