Agreements for utilities

Vital to any new development is the provision of utilities for the dwellings/units to be constructed on site. Organising utility connections often identified by developers as being the single most common cause for delay in construction projects.

The degree of complexity in getting a connection to a new development depends greatly on the size and nature of the development itself. The small scale projects may only involve connecting a property to the existing network whereas large scale schemes may involve multiple connections, planning and construction of physical infrastructure such as pipelines, cables, switch gear and this will involve the negotiation of more complex legal agreements for the construction connection and adoption of services.

Electricity and Gas

A developer has the option of either asking the local gas or electricity distribution network operator to connect the premises to their distribution network and they will then be responsible for installing the connection. The GDN/DNO will charge an upfront connection charge in line with the published licenced condition charging statement; or use an independent distribution company who tend to specialise in the construction of new housing estate networks and larger non domestic one off connections; or use an independent connections provider who can provide the connection but as they are not licensed to operate a distribution network on connection they must transfer the physical assets to a licence distributor which is referred to as “adoption”.

Water

Developers may ask the water and sewerage operator to install the new pipework for a water main sewer (“requisitioning”) OR they may choose their own contractor to do the work (“self lay”) either way the water company will adopt the assets as being installed to an agreed design and meet the terms of its agreement with the developer or self lay organisation who carried out the work.

Using a host

When a new water supply is needed then the developer can request the local water company to connect its development to an existing main either by direct connection of the service pipe or after installation of the network extension. If a new main is required the developer must ask the water company to design and lay the new water main on the development. Sewerage is usually installed by the developer and then adopted and a sewerage undertaker and the developer will enter into a Section 104 Adoption Agreement covering all new sewers and laterals that will connect to the public sewer system.

Self lay

This is a process whereby developers and their contractors can install new water mains and service pipes instead of asking the water company to do the work.

Before a site can be energised the hosting developer must enter into a connection agreement and an adoption agreement (if the connection is to be adopted by the host). The connection agreement comes with conditions under which the site is to be physically connected to the host network. Generally these take a standard form with schemes specific. The adoption agreement details the terms under which the host will take control and ownership of the contestable connection assets as part of its wider network. It also includes details of the responsibilities of all three parties (the host, the developer and the third party constructing and testing the connection works).

Most standard agreements typically leave most of the cost and delivery risk with the customer and include a “use it or lose it” provision such that if not all of the capacity created is taken up within a specified period then the host may well this capacity to others.