Ofwat backs water industry competition

Households and businesses should be able to choose their water and sewerage supplier in the same way they do their gas, electricity or telephone provider, the water industry's watchdog has recommended.

Ofwat said the change could promote innovation, efficiency and lower prices, as well as minimising the adverse impact of the industry on the environment.

The change should be introduced step-by-step, starting with business customers, to allow competition to “prove itself”, the watchdog said.

Ofwat’s Review of Competition in the Water and Sewerage Industries: Part II, also recommended a number of organisational and legal changes that it believes will be necessary.

Business customers with very high water use – more than 50 megalitres a year – are already eligible to switch providers but this only affects about 2,000 companies.

Ofwat chief executive Regina Finn said: “”We propose that more of the market is opened progressively, starting with all business customers.

“In time households could be able to choose their water supplier, when the market is ready and safeguards are in place.

“Competition will drive benefits such as greater responsiveness to customers’ needs, innovative approaches to adapting to climate change and downward pressure on costs.

“Competition can also help respond to the environmental challenge of water scarcity, which the Government highlighted in its water strategy.”

The recommendation was welcomed by the Water Industry Commission for Scotland (WICS), which oversaw the opening up of competition to business customers and public sector bodies in Scotland on April 1.

CEO Alan Sutherland said: “Competition was long overdue and we are leading the world by being the first country to introduce competition to its water sector.

“For us, the launch on 1 April meant the end of ‘one size fits all’ water provision.”

The Consumer Council for Water backed the recommendation and said it would be working with Ofwat to research domestic customers’ views and needs.

Sir James Perowne, chair of CCWater central and eastern, said: “We have been pushing for Ofwat and the government to widen competition and are pleased that they are now looking at making changes to the system.”

Kate Martin

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