Enabling new water resources – a consultation on commercial arrangements

About Consultation

RAPID, established in 2019, is the Regulators’ Alliance for Progressing Infrastructure Development. We are a partnership of three water regulators: Ofwat, the Environment Agency and the Drinking Water Inspectorate (DWI). Natural Resources Wales (NRW) is involved in an advisory capacity and has a decision-making role for any strategic water resource solutions involving Wales, Welsh policy and legislation.

RAPID provides advice and recommendations on the development of strategic water resource solutions to the partner regulators, Ofwat, the Environment Agency, DWI and to NRW. The responses to this consultation will feed into our advice to partner regulators and to NRW.

This consultation builds on our 2021 consultations1 on the regulatory and commercial frameworks required to support the development of those strategic water resource solutions.

This consultation sets out our further thinking and assessment of policy options on commercial frameworks, specifically in relation to commercial / contractual models including bulk supply water transfer agreements and associated policy, such as charging.

We welcome views on our proposals and assessment of policy options as set out in this document.

Given the high level of interest we have received we are extending the consultation closing date to Wednesday 20 March to enable all interested parties further time to respond.

Outcome

This policy outcome document sets out our policy direction for issues discussed in the consultation: Enabling new water resources – a consultation on commercial arrangements. In summary, RAPID and Ofwat:

• continue to advocate a default commercial model (Lead Party) as the optimum way forward, and set out the work we have progressed looking at the allocation and mitigation of risks of the model;

• have further developed proposals for standardised guidance for water companies on negotiating bulk supply agreements and the form that this guidance should take. There will be a consultation on the draft guidance later in 2025; and

• have re-examined the proposed elements of the bulk supply agreement charging model, undertaken analysis and illustrative modelling and explained how we have developed the model further.

RAPID has now concluded its work on the policy frameworks set out in the original consultation and Ofwat will be taking the policy frameworks forward and implementing them.