King’s Cross inset appointments upheld

03 Dec 2010

The Administrative Court (Mitting J.) has rejected a challenge by Thames Water Utilities Limited (TWUL) to Ofwat’s decision to grant the application of Independent Water Networks Limited (IWNL) to be appointed as the water and sewerage undertaker for a re-development site at King’s Cross.

Under the Water Industry Act 1991, an incumbent supplier may be replaced in part of its area of appointment by a new supplier if certain eligibility (or “inset”) criteria are met.  IWNL’s application was the first time Ofwat had considered the applicability of the “unserved” and “large user” eligibility criteria in respect of a large “brownfield” site.

In relation to the “unserved” criterion, the main issue was whether or not the proposed inset area could be treated as unserved notwithstanding the fact that it had been supplied by a TWUL distribution main still present on the site.  The Court found that, although a temporary disconnection of supply could not suffice, depending on the circumstances the demolition and disconnection of premises could render a site unserved.

In order to satisfy the “large user” criterion, it is necessary that “premises” receive or are likely to receive a supply of water of at least 50 megalitres in any period of 12 months, and that the customer in relation to the premises consents to the appointment.  The issue in the present case was whether Ofwat had been correct to conclude that the developer could be treated as the customer in relation to the premises (defined as the site).

TWUL argued that Ofwat was not entitled to aggregate demand from future customers from individual premises on the site in order to fulfil the large user criterion.  However, the Court found that the developer could be treated as the customer in relation to the premises as Ofwat had defined them with the result that the future aggregate demand of the site could be used to satisfy the volume threshold.

The Administrative Court granted permission to TWUL to appeal to the Court of Appeal on both issues.

Kassie Smith appeared (with Michael Fordham QC of Blackstone Chambers) for Thames Water Utilities Limited.

Ben Rayment appeared for Independent Water Networks Limited.

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Kassie Smith QC
Ben Rayment