Ofwat has launched a consultation on how to deliver improved competition to benefit water customers in England and Wales.

Keith Mason, Director of Regulatory Finance and Competition at Ofwat, said:

"Ofwat has a duty to promote competition which is in the interests of water customers. This consultation opens a substantial debate on how that can best be achieved and what Ofwat, and other parties can do to make that happen. We are looking for views to help us take this forward."

In the paper, Consultation on market competition in the water and sewerage industries, Ofwat sets out a range of options for discussion. These include ways that existing competition under the water supply licensing (WSL) regime could be improved, such as:

• Adopting a new access pricing system that better reflects the costs of access for new companies entering the market; and
  
  
• Recommending a significant one-off reduction in the current eligibility threshold of 50 million litres of water a year.

The paper also considers major changes to the industry by:

• Separating the different parts of the water supply and waste water collection services to open them up to competition, e.g. separating water treatment and distribution;
  
  
• Extending competition to household customers; and
  
  
• Extending competition in the production and abstraction of water.

Mr Mason added:

"We believe that two significant obstacles to the present competition regime are the current approach to access pricing and the high eligibility threshold. We welcome the Government's commitment to bring forward its review of water supply licensing to ensure that it delivers more effective competition, and we will play our full part in the review."