Ofwat moves to increase U.K. water industry competition

Keith Mason,
Regulatory Finance
and Competition

London, U.K. — (METERING.COM) — May 7, 2007 – U.K. water and sewerage economic regulator Ofwat has taken further steps in its bid to increase competition in the water industry in England and Wales.

These include seeking the views of the public and other affected parties on two key issues – the water supply licensing (WSL) regime and the nature of secondary supplies, or ‘spare’ water that water supply licensees can buy from an existing water company to supply their customers in a neighbouring water company’s area.

The move follows an internal review completed before Easter into why progress towards a more competitive market had been slower than expected, which found that the two main barriers to competition are the ´Costs Principle´ regime, set out in primary legislation, for setting access prices payable by a WSL licensee to an appointed water company , and the ‘size threshold’ that allows only commercial customers who use at least 50 Ml/y of water a year (approximately 2,200 customers) to chose their water supplier.

Proposed changes to the WSL regime are aimed at improving the way the current WSL regime works, while the secondary supply consultation sets out how the water supply licensees can buy ‘spare’ water for supply to their customers.

Following these consultations, which end on June 1, Ofwat aims to implement the guidance as quickly as possible.

Keith Mason, Director of Regulatory Finance and Competition said, “We have recognized the key barriers to competition and while these require a change in the law, Ofwat is proposing to take some further steps under the current regime to promote competition.”