Recommendations could improve water competition

3 January 2008
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03 January 2008 | Paul Snell

Up to 1.2 million businesses could be permitted to switch water supplier if new proposals from water regulator Ofwat are adopted.

Currently only 2,200 customers who are using more than 50 million litres of water a year are eligible to switch supplier. Ofwat has recommended this threshold is initially reduced to 5 million litres by the end of 2008, and then eliminated entirely within the next two years. These proposals should initially qualify 27,500 customers to switch, eventually rising to 1.2 million.

The recommendation comes following the regulator's investigation into how competition for customers can be improved in the sector. Ofwat began the study after it found previous attempts to make the sector competitive had failed (News, 26 April 2007).

The regulator has also suggested scrapping rules that allow water providers to set prices for access to their networks. Ofwat said it wished to discuss changes further before committing to a scheme that would replace it.

Both proposals will require changes to legislation by the government. Keith Mason, director of regulatory finance and competition at Ofwat, said in a statement: "Competition in other sectors has led to lower bills and improved service. We welcome the government's commitment to a review of competition and we would like to see the proposals we are making in this paper taken on board in that review."

Ofwat will publish the second part of its competition review this Spring.

SMjan2008

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