Ofwat slow to promote water industry competition – Lords

There is no reason why customers shouldn't be able to pick and choose their water supply in the same way they can switch power companies, say the Lords, and Ofwat must shoulder responsibility for the current lack of options.

While other economic watchdogs are succeeding in promoting competition and competitiveness in the markets they regulate, Ofwat is failing to match these achievements, according to the House of Lords.

In its November report on the UK’s economic regulators The Lords’ Committee on Regulators criticised Ofwat for not doing enough in this area.

In recent years consumer choice has expanded rapidly in other regulated industries, notes the report, with customers finding it relatively easy to switch their supplier of gas, electricity or telecom services, for example.

Ofwat has failed to deliver the same level of choice to water companies.

The committee argues that there are no special reasons for this, and that there is nothing specific in the nature of water and the way it is supplied which prevents an opening up of the markets.

Despite this, says the committee, it is still impossible for members of the public to change their water supplier if they are unhappy with the service they are receiving or simply find another deal elsewhere.

One explanation for the failure of the water market to provide adequate consumer choice is Ofwat’s interpretation of a provision of the Water Act 2003 which requires water undertakers to develop access codes to set out terms and indicate prices for allowing licensees access to their water supplies.

The committee does not accept Ofwat’s position that the legislation itself must be amended and argue that the regulator must do more to ensure enhanced competition in the water market.

Sam Bond

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