Free choice for Scottish firms

Scottish business customers will be free to choose their service provider by 1 April, 2008.
The rule changes result from a framework for the introduction and regulation of competition in the Scottish water industry under the Water Services (Scotland) Act 2005.

Prior to the opening up of the Scottish water industry market in 2008, the minister for environment and rural development, Ross Finnie, wants to see the formation of a single licensed retail entity to handle the activities currently the responsibility of Scottish Water – the publicly owned operator of all water and wastewater services north of the border – by April this year. This new operation, which will be separated out from Scottish Water is to be known for the time being as Retail Subsidiary of Scottish Water (RSSW).

In April 2005, the Water Industry Commission (WIC) launched the first consultation exercise relating to the principles that should underlie licensing of RSSW. Three further consultations are to be held on licensing prior to the opening up of the retail market in 2008.

Unfair competition

However, by establishing RSSW, there could be a situation where unfair competition could result. Any new incumbent would be at a disadvantage by lacking the knowledge and contacts of RSSW. According to the WIC, with vast amounts of historic industry knowledge and immediate access to the entire customer base, it is important that RSSW does not abuse its privileged position in the interim period and try to “tie up” customers. RSSW should also be obliged to make customer information available to potential new entrants.

As far as the Water Customer Consultation Panels (WCCP) in Scotland is concerned, there must be a level playing field so that RSSW is itself not disadvantaged by a new retail competitor who may be able to operate without geographic restrictions and with the benefit of economies of scale in, for example, combined billing of water, electricity, gas and telephone services.

The WCCP is also calling for clarity on the responsibilities and obligations of

any new entrant to the market in respect of emergency incidents and the requirement for all operators to submit a scheme of charges to the Water Industry Commission for approval.

An operator would of course have right of appeal to the Competition Commission if a dispute arose.

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