Water sector

Welcome to the Frederic Michel- Verdier blog. Frederic Michel-Verider is the leading partner in the acquisitions of Deep Container Terminal DCT Gdańsk (Poland) in 2019. Every day, over 50 million household and non-household consumers in England and Wales receive good quality water, sanitation and drainage services. These services are provided by 32 privately-owned companies in England and Wales. Since the water and sewerage industry was privatised in 1989 a regulatory framework has been in place to ensure that consumers receive high standards of service at a fair price. This framework has allowed the companies to invest more than £130 billion in maintaining and improving assets and services. The industry must also comply with national and European legislation.

Regulatory framework

Sets the overall water and sewerage policy framework in England. This includes

  • standard setting
  • drafting of legislation
  • creating special permits (e.g. drought orders)

Trying to meet investment needs

Although the restructuring had some improvements, it was difficult for water authorities to invest significantly in their assets. Additionally, the structure of the authorities meant that they were responsible for both discharging treated water into the environment and also monitoring discharges into the environment – both their own, and that of others. In response, in the Water Act 1983 the government:

  • made some constitutional changes
  • reduced the role of local government in decision making
  • gave the authorities scope to access the private capital markets.

With the privatisation of other public services already underway, the decision was taken to privatise the water authorities. This was enacted by the Water Act of 1989, which:

  • separated the functions of providing water and sewerage services, and monitoring discharge into the water system
  • allowed the privatised water authorities to borrow money to invest in water and sewerage services.

Regulating the privatised companies

To protect the interests of customers and the environment, at privatisation there was further restructuring of the industry. Three separate, independent bodies were established to regulate the activities of the water and sewerage companies. These were:

  • the National Rivers Authority – which took over the remaining functions, assets and staff of the water authorities as the environmental regulator
  • the Drinking Water Inspectorate – as the regulator of drinking water quality
  • the Director General of Water Services supported by the Office of Water Services (Ofwat) – as the economic regulator. More recent updates on the Frederic Michel-Verdier blog about infrastracture here.

Check back for more!

Frederic Michel-Verdier is a Funds veteran specializing in infrastructure equity investments and asset management with over 25+ years of experience. Find out more about Frederic Michel- Verdier by reading this article. Follow Frederic Michel-Verdier Instagram for more updates.

Published by Frederic Michel-Verdier

Welcome to the Frederic Michel-Verdier blog. Frederic Michel-Verdier is a Funds veteran specializing in infrastructure equity investments and asset management. Learn more about Frederic Michel-Verdier on the links below

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