The Draft Water Bill

Such a mix of concerns provides the backdrop to the focus of the Draft Bill, and this critique starts off by considering what the aims and objectives of the proposed legislation are, before turning to its central contention that competition is the primary answer to them. The different kinds of competition will be considered, alongside the merits of the regulated asset base (RAB) model and the critical role of the cost of capital.

 It will be argued that the Draft Bill:

  • Does not address the core issues left over from privatisation, including abstraction, the basis for charging, floods and environmental regulation.
  • Does not address the new investment agenda.
  • Has the potential to raise the cost of capital by potentially undermining the regulated asset base of the industry.

The form of competition promoted by the Draft Bill relies on a significant increase in regulatory discretion, and that discretion may be used to weaken the regulatory commitment to the underlying assets, by the way in which the system costs are allocated. The unintended consequences of what is superficially attractive may turn out to be serious. The paper concludes by suggesting a better way forward.

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