Ofwat's director of policy and communication Marian Spain has said that opening the water sector up to competition for business customers would result in “a lot less need for regulation on price” and that if water companies can help businesses better “it will help all of us.”
Commenting on Government proposals to allow non-household customers in England and Wales to choose their retail supplier of water and sewerage services, Ms. Spain said that if business customers who currently spend £1.3 billion and use a quarter of the sector’s resources, had more buying power there would be “ a lot less need for regulation on price.”
Speaking at the Institute of Water’s annual conference yesterday, she said that Ofwat was no longer looking at “one size fits all regulation” but tailored regulation – although this did not mean less regulation. She described the now-discontinued annual June returns completed by the water companies as something which had become “ a huge and unnecessary burden for both the industry and Ofwat for collecting data we didn’t really need.” The regulator wanted changes to ensure a number of things, including the flexibility to avoid carbon-intensive solutions i.e. costly, hard engineering solutions.
On the current drought, Marion Spain said the water sector was now much more resilient compared with the long drought of 1976. Ofwat also had “a collaborative, joined-up approach” in working with the Environment Agency on abstraction licences. However, despite the fact that the sector was coping very well, the public was far more likely to criticise and challenge everything about the sector. Ensuring that customers were both willing and able to pay for their bills was now necessary to achieve “customer legitimacy”.
Commenting on what change would mean for people working in the industry, Ms. Sopain said it was fundamentally all about service to customers. The focus on outcomes would mean it was the ends that mattered – not the means.
Referring to Ofwat’s proposal in its Statement of Prnciples on Future Price Limits published on Tuesday to treat Opex (operating expenditure)and Capex (capital expenditure) together in a total costs - totex- approach, she said the “figures showed that they weren’t quite there yet.”
Finally, on upcoming legislation, Ms. Spain flagged up the possibility of a Water Act being put in place in 2014.
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