WATER REGULATOR Philip Fletcher is over-reaching his role and interfering with environmental policy, Environment Agency chief executive Baroness Young told MPs last week.
She accused him of excluding vital environmental schemes from the water industry's 2005 to 2010 spending programmes.
'We have got to a point where the regulator is taking environmental decisions, which diminishes our and the (environment) minister's role, ' Young told the cross party Commons environment, food and rural affairs committee.
'We need better clarity of roles. The minister decides what should be in the environmental programme and the economic regulator's role is to make sure that it is delivered most cost effectively, ' she said.
Ofwat defended Fletcher's role. It said there was uncertainty about the cost of schemes currently excluded from the plans.
In some cases the regulator doubted that water companies were proposing cost effective solutions.
It said some schemes could also reappear in the final programme in December if water companies could demonstrate their cost effectiveness.
Young said the Agency would order water companies to carry out some schemes before 2010 if the regulator excluded them from spending plans.
Schemes involved in the dispute include measures to comply with the Freshwater Fish Directive by reducing storm water pollution in the Manchester Ship Canal, the River Tame and the River Aire.
There are also projects to meet bathing water standards in the south west and on the Fylde coast in the north west.