Consultation on Charges
The Environment Agency has released their consultation on ‘charge proposals’ that are due to take effect in England from April 2022. The consultation closes at 11:45pm on 10 November 2021.
The proposed changes will apply to licence application and annual subsistence charges for water abstraction and impoundments. By implementing these changes, the Environment Agency aims to recover the time costs that they incur in assessing, determining, and managing licence applications and licences, as well as allowing charges to be more individually tailored towards the services received by the applicant.
This bulletin sets out the key changes and how they will impact new and existing abstractors.
Licence application charges are currently modest, with most attracting a £135 fee. A fee of £1,500 is applied for transfer, impoundment and ‘hydroelectric power generation of >5KW’. Minor and administrative changes are currently free.
The proposed application charges are presented in Table 1. With the exception of an administrative change, or renewal of an existing licence on the same terms, the application charges for all other types of applications will increase significantly. The exact cost will be based on:
- Application type.
- Volume of abstraction. The following four charging bands are proposed:
0 – 50,000 m3/yr
50,001 – 120,000 m3/yr
120,001 – 1,400,000 m3/yr
- Water availability status in the catchment. Charges will be higher in catchments where surface water is restricted or not available, or where groundwater is at a poor status.
Additional charges will also apply depending on the level of external consultation and advertising required during determination, whether a Habitats Assessment is required, and whether any material changes are made to the application detail during the determination process.
Discounts may be available in cases where more than one related application is progressed simultaneously.
Annual (Subsistence) Charges
Annual licence charges for ‘full’ licences and for ‘hydroelectric power generation of >5KW’ are currently based on:
- Source of supply (tidal or not)
- Abstraction period (summer/all year, or winter only)
- Standard Unit Charge (varies regionally)
- Loss factor of the usage
- Whether the water comes from a ‘supported source’ or not
For winter only abstractions (November to March only), charges are 10% of the summer /all year rates. The current annual charge for a ‘transfer’ licence is the standard ‘admin’ charge of £25 and there is no annual charge for ‘impoundment’ licences.
It is proposed that most of the factors above will continue to feed into the annual charges.
However, an ‘All England’ set of charging bands will be introduced based on volume and site-specific elements around water availability/quality and whether there is any benefit from specialised modelling undertaken by the Environment Agency.
The ‘All England’ charging bands will replace the regional Standard Unit Charge, which will benefit some abstractors, particularly those in the Anglian region. The degree of change is highly dependent on which charging band a licensed volume falls within and abstractors with multiple licences could see some charges increase and some decrease. The largest increases look to be proposed to winter only abstractions due to the reduction in seasonal discount applied.
To assist in assessing the charges that will apply to a specific site, the Environment Agency has produced an online map where it is possible to check the relevant factors and then estimate the annual charges with their ‘Charge Indicator Tool’. As an example, we have produced some potential ‘worst case’ charges in Table 2.
And, if that wasn’t enough, the Environment Agency is also proposing to introduce time rate charges for their enhanced pre-application advice service, where they may advise on:
- Submitting relevant information
- Complex modelling
- Monitoring requirements
- Specific assessments
However, much of this isn’t really new!
What This Means for New and Existing Abstractors
The current charging structure and scale of charges will change significantly, from April 2022.
Whilst renewal of existing licences on the same terms will remain at the same very low application charge; renewals on different terms, major variations or applications for new licences will incur charges of several thousand pounds, and sometimes tens of thousands.
The changes to annual licence charges introduces an ‘All England’ set of charging bands and removes the current regional Standard Unit Charges. Changes will be site specific and whilst some abstractors could see significant savings, others (particularly winter only licences) will increase in cost quite significantly.
Existing licence holders must assess the impact of the changes using the Environment Agency’s online map and ‘Charge Indicator Tool’. We strongly advise you to provide feedback before the consultation closes on 10 November 2021.
Envireau Water is currently acting for a number of abstractors to assess what the proposed changes mean to them. If you require professional support to understand how the changes could impact you and your business, then contact us to discuss how we can help.