The Welsh Government and UK Government jointly established the Commission to undertake the most comprehensive examination of the water sector since privatisation.

Launching the Green Paper, Huw Irranca-Davies MS, Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs said:

“The proposals represent a once-in-a-generation reset of water governance in Wales. We are proposing a dedicated Welsh economic regulator for water, underpinned by new legislation and a modern regulatory framework that encourages investment and delivers a water system that works for Wales….

“The system we have today was designed for a different era. It no longer meets the needs of our people, our environment or our economy. It is time for a fundamental reset.

“Our proposals place environmental protection, public health, and ecosystem resilience at the heart of water governance. People want cleaner rivers, coasts and lakes, and a regulatory system that is fair, effective, transparent and fit for purpose. Achieving this requires a whole-system approach.”

The Welsh Government’s ambition is to create a Welsh regulatory framework and to establish a Welsh economic water regulator with the authority and independence Wales needs. However, this cannot happen without securing the necessary devolved powers.

 On 20 January 2026, the UK Government published its White Paper, A New Vision for Water, setting out a programme of change for the water sector in England. The Welsh Government says that while the White Paper is focused on arrangements for England, the current integrated nature of parts of the water system means these changes have implications for Wales and underline the importance of effective cross-border coordination during the period of transition.

However, this will not remove the difficult choices ahead, the Green Paper warns:

“Investment needs for environmental improvement, climate adaptation and infrastructure renewal will exceed what customers can reasonably afford. Hard decisions will be necessary when balancing investment with affordability, and these will require firm, evidence-based decisions to deliver the best outcomes for Wales.”

Proposal outlined in the Green Paper for Wales include:

The Green Paper envisages three phases of change with two transition periods which will evolve as workstreams progress. The first transition plan is a joint plan with Defra to ensure regulatory continuity, with the second covering the steps needed to transition to the new body and regulatory regime in Wales.

The first transition plan will set out the key stages and principles for change for Wales, providing clarity for stakeholders on how the programmes in England and Wales will interact during the period when the reforms are being instituted.

During transition, the Strategic Policy Statement will set interim expectations for service, transparency and support for customers in Wales.

Other features include:

The Green Paper says:

“We are currently working with the UK Government to explore the proposals set out in the Green Paper. This includes discussing the scope of the legislative and executive competence that may be required to implement these proposals. Welsh Government and UK Government both recognise we are entering a new normal. To deliver this successfully, the right governance and devolved functions must be in place, supported by legally sound processes. We are asking for expanded legislative competence and for relevant statutory powers and executive functions, currently found in England and Wales wide legislation to sit clearly within the remit of the Senedd and Welsh Ministers’ because they are essential to implement the Commission’s recommendations for Wales.”

Ofwat CEO welcomes Green Paper 

Responding to the Welsh Government’s Green Paper on water, Chris Walters, Ofwat interim CEO, said:

“This Green Paper sets the framework for the future of the water sector in Wales, which we welcome. The creation of a dedicated regulator for Wales will strengthen scrutiny and accountability within a framework designed specifically for Wales, marking an important evolution in how companies will be overseen going forward.

“As the Welsh government develops the regulatory new body, we remain committed to the delivery of our core functions and are already working closely with Welsh Government, Defra, Natural Resources Wales and other regulators to ensure that the sector moves towards a more integrated and resilient future.

“Our 2024 Price Review approved record investment in Wales – more than £6.3bn – which will enable major improvements for customers and the environment by 2030.”

Click here to download the Green Paper Shaping the Future of Water Governance in Wales