Customers could save £8 per year from retail water market change in England
The financial benefits from opening the water utility market to competition in England could be worth £2.9bn over 30 years, which amounts to £8 per customer, per year, according to a new report...
LONDON, England – The financial benefits from opening the water utility market to competition in England could be worth £2.9bn over 30 years, which amounts to £8 per customer, per year, according to a new report.
Water regulator Ofwat has published a report on the costs and benefits of introducing competition to the residential retail water market in England, as requested by the government.
In its assessment, Ofwat stressed the uncertainty in predicting the outcome of opening the market, but has identified a range of potential financial and service benefits.
Ofwat’s report suggests that reductions in customer bills are possible but likely to be small, especially in the short term.
However, it could lead to innovation, improved customer service, new offers - including bundling of products such as energy and telecoms with water - and, crucially, give customers the freedom to choose their supplier – ending the final retail monopoly.
Customer research suggests that 56% think having choice would be a good thing.
In the course of its review, Ofwat said it heard from a number of potential new entrants, who can see the opportunity from a new market to provide retail services more efficiently, to offer new products and services.
Under the new proposals, water could be bought by supermarkets, telecoms groups or banks and then sold onto households, bundled in with other bills such as internet supply.
Earlier this year Ofwat came under fire from the Public Accounts Committee for overestimating water companies’ tax costs (read WWi).
From 2017, businesses and other non-household customers will be able to switch supplies.
Cathryn Ross, chief executive of Ofwat, said: “We are living in an age of retail revolution, but water customers are being left behind. 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.”
Ofwat has submitted its assessment to the government of the potential costs and benefits of opening the residential retail water market in England.
It is for the government to decide whether in principle it wants to introduce competition and, if so, how and when to do so.