Ofwat has published proposals to change the water supply licensing (WSL) regime to bring the benefits of effective market competition in the water and sewerage industry to more customers. Market competition in the water and sewerage industries in England and Wales sets out Ofwat’s recommendations on changes to the WSL regime. The recommendations are part of Ofwat’s plan to introduce effective market competition into the water and sewerage sectors in England and Wales.
Ofwat take the view that effective competition across the water sector in England and Wales will lead to greater benefits for consumers in the future, driving dynamic efficiency and spurring innovation in a way that regulation generally cannot. The main changes proposed in the paper are to:
increase the number of non-household customers eligible to benefit from competition and;
amend the access pricing regime, by asking the Government to remove the Costs Principle from legislation.
Ofwat proposes that, initially, the current 2,200 customers eligible to change water supplier should be increased to include around 27,000 non-households, rising to all 1.2 million non-households in the near future. Greater flexibility in how access prices should be set is also proposed, which requires a change to legislation.
The proposals represent the conclusions of Part One of Ofwat's competition review, which is focussed on making the WSL regime more effective and developing greater transparency in the market by implementing accounting separation by appointed water companies.
Keith Mason, Director of Regulatory Finance and Competition, said: "Competition in other utility sectors has lead to lower bills and improved service, enabling the withdrawal of regulation where markets become effectively competitive."
"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 and the forthcoming paper in spring 2008 taken on board in that review.
"Government can expand the market and amend the access pricing regime, both of which will improve the prospects for the development of greater competition in this sector."
Ofwat are asking for comments on the proposals to be submitted by February 2008.
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