Water industry regulator Ofwat has launched a new consultation on its proposal by to vary the appointments of Independent Water Networks and Southern Water as sewerage companies.

Independent Water Networks has applied to be the sewerage company for a development consisting of 1,500 household properties in Ebbsfleet - the site is presently within the Southern Water sewerage services area.

The new appointment and variation mechanism provides an opportunity for entry and expansion into the water and sewerage sectors by allowing one company to replace the existing appointee as the provider of water and / or sewerage services for a specific area. The mechanism can be used by new companies to enter the market and by existing appointees to expand their businesses.

Ofwat proposes to:

• vary the appointment of Independent Water Networks as a sewerage company by adding the site to its sewerage services area; and
• vary the appointment of Southern Water as a sewerage company by excluding the Site from its sewerage services area.

Independent Water Networks proposes to construct, own and operate an onsite sewage treatment works and sewerage network for the new development. It is also proposing to offer customers a 5% discount on the volumetric charge for sewerage services compared to that of Southern Water, while matching Southern Water’s fixed sewerage charge.

Ofwat said that having considered Independent Water Networks' pricing proposals, it is satisfied that customers will be at least no worse off in terms of their annual bills than if they had been served by Southern Water. In terms of levels of service, Independent Water Networks is subject to the same customer service level requirements as other sewerage appointees.

However, Independent Water Networks does not propose to match Southern Water in some areas which are not statutory or appointment requirements, for example:

• Independent Water Networks currently has no charitable trust fund.
• Independent Water Networks offers more limited ways for customers to contact it than Southern Water. For example, Southern Water has a variety of telephone numbers including Freephone, 0845 and 0300 numbers whereas Independent Water Networks has one single local rate telephone number.

Ofwat said it has explained to Independent Water Networks that these areas must be kept under review as its customer base expands.

Having considered Independent Water Networks' overall proposed service levels, and compared them with those of Southern Water, the regulator said it is satisfied that customers on the site will receive a level of service that is comparable with the level of service they would have received had they been served by Southern Water.

Ofwat also takes into consideration the choices of the site developer – which has said that it wants Independent Water Networks to be the sewerage company for the site.

Ofwat has also looked at the potential effects of the variation on the prices that Southern Water's existing customer base may face in considering whether they will be no worse off. The regulator has calculated that if it grants the site to Independent Water Networks, there may be a potential impact on Southern Water’s existing customers of between £0.12 and £0.15

Ofwat said it is “minded to grant the variation under the unserved criterion” and is now consulting on its proposal to do so.

Deadline for responses to the consultation 17 February 2015. Any representations about the proposal should be sent in a single written submission to Richard Field, Senior Associate, Ofwat, Centre City Tower, 7 Hill Street, Birmingham, B5 4UA so as to be received no later or via email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Click here to access the consultation document.