Ofwat: water competition poor

25 April 2007
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26 April 2007

Attempts to stimulate competition in the water industry have been unsuccessful, according to the water regulator Ofwat.

Firms that use more than 50 million litres of water each year can switch supplier, but no customer has yet done so.

Keith Mason, director of regulatory finance and competition at Ofwat, said: "We take our duty to promote competition very seriously and are disappointed by the lack of progress."

Rules introduced in December 2005 allow water suppliers to grant "retail licences" to other firms who then sell to customers, creating competition. But only seven licences have been granted so far.

One reason for this is the strict rules on setting prices to gain access to water networks as a licensee. These produce low margins, which discourage firms from entering the market and stifled competition (News, 2 November).

The regulator is to revise its guidance on licensing and consult on long-term changes. A report on ways to increase competition is due in June.

SMapr2007

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