Water Act 1989

41 Financial conditions for water main requisition

(1) The conditions mentioned in section 40(1)(c) above are satisfied in relation to a requirement for the provision of a water main by a water undertaker if—

(a) such undertakings as the undertaker may have reasonably required in accordance with subsection (2) below have been given by the person or persons who have required the provision of the main; and

(b) such security as the undertaker may have reasonably required has been provided for the discharge of any obligations imposed by those undertakings on any person who—

(i) by virtue of section 40(2)(a) or (b) above required, or joined in requiring, the provision of the main; and

(ii) is not a public authority.

(2) The undertakings which a water undertaker may require for the purposes of subsection (1) above in respect of any water main are undertakings which bind the person or persons mentioned in that subsection (in the case of two or more persons, either jointly and severally or with liability to pay apportioned in such manner as those persons may agree) to pay to the undertaker, in respect of each of the twelve years following the provision of the main, an amount not exceeding the relevant deficit (if any) for that year on that main.

(3) For the purposes of this section the relevant deficit for any year on a water main is the amount (if any) by which the water charges payable for the use during that year of that main are exceeded by the annual borrowing costs of a loan of the amount required for the provision of that main.

(4) The annual borrowing costs of a loan of the amount required for the provision of a water main is the aggregate amount which would fall to be paid in any year by way of payments of interest and repayments of capital if an amount equal to so much of the costs reasonably incurred in providing that main as were not incurred in the provision of additional capacity had been borrowed, by the water undertaker providing the main, on terms—

(a) requiring interest to be paid and capital to be repaid in twelve equal annual instalments; and

(b) providing for the amount of the interest to be calculated at such rate, and in accordance with such other provision, as may have been determined either by the undertaker with the approval of the Director or, in default of such a determination, by the Director.

(5) The costs reasonably incurred in providing a water main (“the new main”) shall include—

(a) the costs reasonably incurred in providing such other water mains and such tanks, service reservoirs and pumping stations as it is necessary to provide in consequence of the provision of the new main; and

(b) such proportion (if any) as is reasonable of the costs reasonably incurred in providing any such additional capacity in an earlier water main as falls to be used in consequence of the provision of the new main;

and in this subsection “earlier water main”, in relation to the new main, means any water main which has been provided in the period of twelve years immediately before the provision of the new main and was so provided in pursuance of a requirement under section 40 above, under the provisions of section 36 or 37 of the 1945 Act or of section 29 of Schedule 3 to that Act (water main requisitions) or under any local statutory provision corresponding to section 40 above or to any of those provisions of the 1945 Act.

(6) Any reference in this section to the provision of additional capacity in a water main provided in pursuance of a requirement under any enactment is a reference to such works carried out or other things done in connection with the provision of that main as are carried out or done for the purpose of enabling that main to be used for purposes in addition to those for which it is necessary to provide the main in order to comply with the requirement.

(7) For the purposes of this section references to the water charges payable for the use during any year of any main provided by a water undertaker are references to so much of the aggregate of any charges payable to the water undertaker in respect of services provided in the course of that year as represents charges which—

(a) have been imposed by the undertaker in relation to premises which are connected with that main; and

(b) are reasonably attributable to the provision of a supply of water (whether or not for domestic purposes) to those premises by means of that main.

(8) Where for the purposes of subsection (1)(b) above any sums have been deposited with a water undertaker by way of security for the discharge of any obligation, the undertaker shall pay interest at such rate as may be determined either—

(a) by the undertaker with the approval of the Director; or

(b) in default of a determination under paragraph (a) above, by the Director,

on every sum of 50p so deposited for every three months during which it remains in the hands of the undertaker.

(9) An approval or determination given or made by the Director for the purposes of subsection (4) or (8) above—

(a) may be given or made in relation to the provision of a particular water main, in relation to the provision of mains of a particular description or in relation to the provision of water mains generally; and

(b) may be revoked at any time except, in the case of an approval or determination for the purposes of subsection (4) above, in relation to a water main that has already been provided.

(10) Any dispute between a water undertaker and any other person as to—

(a) the undertakings or security required by the undertaker for the purposes of this section; or

(b) the amount required to be paid in pursuance of any such undertaking,

shall be referred to the arbitration of a single arbitrator appointed by agreement between the undertaker and that person or, in default of agreement, by the President of the Institution of Civil Engineers.