Ofwat examines potential for competition in the water market

More competition in the residential water market could be worth billions of pounds and lead to better service, according to the country’s water regulator.

The Water Services Regulation Authority (Ofwat) has published a report, requested by the Government, on the costs and benefits of opening England’s residential retail water market up to competition.

Currently, households have no choice over which company supplies their water.

In its report, Ofwat said there would be initial “significant” costs of setting up a new market, which would likely fall to companies and customers.

The financial benefits could be worth £2.9bn over 30 years – a saving of just £8 per customer per year – but could also lead to innovation, improved customer service and new offers, Ofwat said.

This could include the option of bundling products, such as energy and phone, together with water.

Cathryn Ross, Ofwat’s chief executive, said: “The service offers from water companies can feel behind the curve compared to the innovation customers benefit from when buying other goods.

“The uncomfortable truth is that, when it comes to retail offers, water companies provide an analogue service in a digital age.

“Customers tell us they think they should have the freedom to choose and don’t understand why water is the only retail market in which there isn’t some form of competition.

“But, of course, this isn’t a one-way street: there are significant costs to be considered and it will be important to ensure that customers are treated fairly in a competitive market and that vulnerable customers are protected.

“The decision for the Government to make is whether the potential benefits outweigh the costs and risks.”

Alex Neill, Which? director of policy and campaigns, said: “Giving people a choice over who supplies their water could lead to a better experience for consumers but any plan to open up the water market must learn the lessons of
other utility markets.”

Labour’s shadow environment secretary Rachael Maskell said: “The solution for customers isn’t to carve the water industry up further, bringing in more private suppliers.”

Water UK, which represents the major water and wastewater providers, said: “Extending retail competition to over 20 million households could secure potential benefits for domestic customers, but would also be a major undertaking and so deserves to be given very careful consideration.

“We look forward to a timely decision from Government which helps sustain the stability the industry needs to
continue successfully meeting the needs of its customers.”

Source – http://news.sky.com/story/water-ofwat-examines-potential-for-competition-in-the-market-10584561

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