Ofwat not heeding utilities' lessons in competition bid

6 June 2001
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07 June 2001 | Robin Parker

Water regulator Ofwat is failing to heed the lessons learnt by the gas and electricity industries as it seeks to establish competition in the water supply industry, according to the former director-general of gas regulator Ofgas.

Effective competition in the water industry will depend on breaking up ownership of the water services supply chain to give commercial users a greater choice of suppliers, Clare Spottiswoode told delegates to the Utel energy and utilities conference in Birmingham. "We need to know who has control of water and at which points," said Spottiswoode, now chairwoman of water supplier h2go.

However, Ofwat's draft water bill does not call for the break-up of services but allows for a vertically integrated supply chain. The draft bill will also create licences for retail and production of water.

Separation of ownership services such as transportation of untreated supplies and treated water is essential, claimed Spottiswoode. "Divide the water supply chain and every [company] knows their place. It makes all activities competitive and disables anti-competitive behaviour."

Purchasers are keen to see competition, but hold out little hope for a swift decision, John Bowhay, procurement manager of capital industrials and services at cereal giant Kellogg's, told SM. "It is nowhere near the top of the government's agenda," he said. "Ofwat is more concerned with quality of treatment and serving the domestic consumer."


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