Additional funding claim for Cardiff County Council / Cardiff Harbour Authority to pay a “commuted sum” to Dwr Cymru – Welsh Water in lieu of annual operating costs (Saesneg yn unig)

Date of decision / Dyddiad y penderfyniad:

16 September 2009

Statement of information / Datganiad gwybodaeth:

Cardiff County Council (CCC), via an agreement (the “S165 Agreement”) made in March 2000 with the former Cardiff Bay Development Corporation (CBDC) under Section 165 of the Local Government Planning and Land Act 1980, assumed responsibility for the day-to-day management and operation of the Cardiff Bay Barrage, the Inland Bay and the Outer Harbour.

Cardiff CC (operating as Cardiff Harbour Authority “CHA”) now has responsibility for the “Undertaking” which the S165 Agreement defines as the functions, powers, duties and obligations conferred upon CBDC under the Cardiff Bay Barrage Act 1993.  This includes an ancillary Agreement of 1992 (the ‘Agreement’) between CBDC, Dwr Cymru-Welsh Water (DC-WW), the Secretary of State for Wales and Cardiff CC. 

This Agreement required CBDC to carry out works to divert outfalls owned by DC-WW which previously had discharged into Cardiff Bay and also made CBDC liable for the extra ongoing operational costs incurred by DC-WW as a result of construction of the Cardiff Bay Barrage.

The terms of the Agreement require Cardiff CC (as successor to CBDC) to fund the increased annual operating costs of a number of pumping stations and other sewerage assets owned by DC-WW.   The current annual operating costs are in the region of £35k but it is expected that there will be a significant increase in future years due to the need for increased repairs and the replacement of aging equipment.   

The Agreement provides two options for the payment of DC-WW’s operating costs:

(i)                  Payment on an annual basis in perpetuity

(ii)                Payment of a commuted sum

CHA and DC-WW have concluded detailed negotiations (in accordance with the parameters laid down in the Agreement) to arrive at a commuted sum payment that is acceptable to both parties.  A figure of £429,201 has been agreed as payment for the final settlement of DC-WW’s annual operating costs incurred as a result of the Barrage Works. 

The Council has submitted a Business Case to the Welsh Assembly Government which recommends the payment of a commuted sum to DC-WW.  The Assembly Government has carried out its own cost/benefit analysis of the Cardiff CC’s Business Case and has also concluded that the payment of a commuted sum represents value for money.  

Under the terms of the S165 Agreement, CHA is entitled to make an additional claim to the Welsh Assembly Government for the payment of the commuted sum to DC-WW.