The Consumer Council for Water (CCW) has warned that the takeover of Bournemouth Water by Pennon could be detrimental to service standards if it leads to a single dataset which masked the poorer performance of South West Water.
In its submission to the current inquiry by the Competition and Markets Authority into the merger, CCW said that data over the past four years shows Bournemouth to be a leading company in terms of operational and customer service performance. In comparison, SW Water is a comparatively poor performing company for some measures which could make it more difficult to press the merged company to improve. All the water companies provide CCW with a range of comparable performance data which it publishes and uses to push the poorer performing companies to improve.
CCW wants the CMA to make it a condition of the merger that separate reporting continues so that both companies’ customers can be assured that the companies will deliver:
- their respective 2015-20 performance commitments, reporting on an annual basis and in a way that is transparent to their customers; and
- that there is no deterioration in service as a result of the takeover.
The customer watchdog would also like to see the merged company give a firm commitment reflected in the CMA’s determination to share the cost savings arising out of the merger with both SWW and BWL customers within a year of them being realised, rather than being wrapped up in the 2019 price review.
CCW also wants separate price limits to be maintained for Bournemouth Water and SW Water to reflect the different environments they operate in.
CCW said the example of the South East Water and Mid Kent Water merger clearly demonstrated why there was a need for such an undertaking. Although the then Competition Commision's determination had stated that the merged entity should deliver a one-off price reduction of £4 million in the 2007-08 charging year, there was no explicit requirement on the merged company to maintain service levels. The performance levels of the merged entity deteriorated in the immediate post-merger period.
Commenting on Source for Business Ltd and Avon Valley Water Ltd, the subsidiary companies set up by SW Water and Bournemouth Water respectively ready for the opening of the market to competition in 2017, CC Water said it would not want customers to experience any deterioration in the service levels currently offered to them by any enforced change of retail service provider.
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