The Government has been considering the recommendations of Professor Martin Cave’s review of the water sector, including the extension of retail competition in the water supply licensing framework.
The new paper is a thorough and comprehensive examination of the evidence base for introducing retail competition in the water sector alongside the legal separation of retailing activities. It builds on the analysis undertaken by the Cave review by incorporating new evidence and arguments that have since been published.
The Cave review presented extensive evidence on the pros and cons of retail competition and separation in the England and Wales water industry in 2009; since then that evidence has been extended by comments on the analysis itself and additional evidence from a range of interested and third parties; and the experience of retail separation in Scotland.
Crucially, the Cave review recommended the legal separation of all retailing activities, not just those relating to non-household customers who would be eligible to switch provider in a competitive market.
Ofwat said the aim of the paper is to advance the debate regarding the merits of retail competition. The regulator has considered a number of issues that are critical to assessing the case for retail competition and legal separation.
For each issue, the regulator has summarised the Cave review’s evidence, arguments and cost benefit analysis, considered the arguments and new evidence presented since the Cave review was published and evaluated the arguments and evidence.
Ofwat said it would now welcome the views of the water and sewerage sectors and other stakeholders on the issues covered in the paper.
Click here to download the Ofwat review paper in full