Water Charges Equalisation Act 1977

1 Equalisation levies payable by certain statutory water undertakers.

(1) If for the year of 1978 or any subsequent year it appears to the Secretary of State that, in proportion to the number of premises to which a supply of water is provided on an unmeasured basis, the relevant financing costs of a statutory water undertaker are less than the average of the relevant financing costs of all statutory water undertakers in England and Wales, he may by order direct the undertaker to pay to the National Water Council a levy (in this Act referred to as an “equalisation levy”) of such amount as may be specified in the direction in accordance with subsection (7) below.

(2) Subject to subsection (9) below, in relation to each statutory water undertaker by which, in the year ending 31st March 1976, a supply of water was provided on an unmeasured basis, the Secretary of State shall determine for the purposes of this Act the amount which appears to him to represent the value at that date of that part of the undertaker’s assets which was then referable to the supply of water on an unmeasured basis.

(3) In this section the “qualifying asset value” of a statutory water undertaker for any accounting period means the amount determined under subsection (2) above in relation to the undertaker, less such amount as appears to the Secretary of State to be appropriate in respect of depreciation for any previous accounting period or periods beginning on or after 1st April 1976.

(4) Any reference in this Act to the relevant financing costs of a statutory water undertaker for any year is a reference to an amount which is determined by reference to the qualifying asset value of the undertaker for the corresponding accounting period and consists of the aggregate of—

(a) such percentage (in this subsection referred to as “the qualifying percentage”) of the interest payable by the undertaker in the corresponding accounting period as appears to the Secretary of State to be referable to indebtedness incurred with respect to assets whose value is reflected in the qualifying asset value for that period, and

(b) so much of the provision for depreciation made by the undertaker in the corresponding accounting period as appears to the Secretary of State to be referable to any such assets, and

(c) in the case of a statutory water company, the qualifying percentage of the franked payments, within the meaning of Part V of the [1972 c. 41.] Finance Act 1972, made by the company in the corresponding accounting period.

(5) For the purposes of this Act, in relation to the year 1978 or any subsequent year the corresponding accounting period of a statutory water undertaker is the accounting period of the undertaker which is co-terminous with or begins in that year.

(6) Any reference in this Act to the average unit cost of statutory water undertakers for any year is a reference to the figure produced by dividing—

(a) the aggregate of the relevant financing costs of statutory water undertakers for that year

by

(b) the total number of premises in England and Wales to which in that year a supply of water is provided by statutory water undertakers on an unmeasured basis.

(7) Subject to section 3(3) below, where the Secretary of State gives a direction to a statutory water undertaker under subsection (1) above for a year, the amount of the equalisation levy to be specified in the direction shall be such as appears to him to represent the amount by which the product of—

(a) the average unit cost of statutory water undertakers for that year, and

(b) the number of premises to which in that year a supply of water is provided by the undertaker on an unmeasured basis,

exceeds the relevant financing costs of the undertaker for that year.

(8) Any equalisation levy which a statutory water undertaker is directed to pay shall be payable by such instalments and at such times as may be specified in, or determined in accordance with, the direction.

(9) Nothing in this section or section 2 below shall apply to any statutory water undertaker which in the year ending 31st March 1976 supplied less than one hundred million gallons of water.