Ofwat: major shake-up promised

Water regulator Ofwat will be reviewed to make sure it can cope with 'future challenges', according to the Government. The industry has welcomed the news, announced by Defra on 27 August, saying the two-decade-old water regulator needs a shake-up.

“Ofwat has been successful in holding down household bills while water companies invest in their infrastructure,” said environment secretary Caroline Spelman. “But we need to make sure the regulator is in good shape to help the industry prepare for a changing climate and a growing population, at the same time as keeping bills affordable.”

Defra has brought in David Gray, the man who reviewed the Department for Transport, to act as lead reviewer. Lord Redesdale, chairman of the Anaerobic Digestion and Biogas Association (ADBA), and a Lib-dem member of the Coalition Government called for Ofwat to be scrapped in July. He added that Ofwat was still ‘failing’ to meet the joint government objectives of combating climate change and promoting renewable energy.

He said: “Ofwat should have used its position as regulator to promote renewable energy, especially anaerobic digestion, to reduce carbon emissions and take a lead role in combating climate change. Failure to develop a renewable anaerobic digestion industry will increase the cost to the same consumer in the future. Ofwat has claimed that the regulation that guides their action is too restrictive.

“This review should make climate change a priority and without it the very case for Ofwat as a regulator must be questioned.”

Chair of the Institution of Civil Engineers’ water panel, David Nickols, said the Institution welcomed the review: “The world we are living in now is very different to that when Ofwat was first set up and the regulatory framework must be reformed to reflect today’s environmental and societal challenges.

“The current investment plans do not do enough to address long-term needs, especially climate change issues. ICE fears that without significant change in the regulatory regime to drive long-term investment in sustainable infrastructure, our long-term water security could be jeopardised.”

The review, due to be completed early next year, will examine the role of Ofwat, including its objectives, its responsibilities, and how it will meet future challenges and ensure value for money.

It will also look at how well the current arrangements, involving Ofwat and the Consumer Council for Water, work in protecting water customers. Defra is also due to publish a Water White Paper next summer that will set out policies for the future of water management.

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