England to follow Scotland with water utility competition for businesses

Plans from the government to open up competition among utilities and allow businesses to choose water supplier have been largely welcomed by the industry, despite the long delay...

Plans from the government to open up competition among utilities and allow businesses to choose water suppliers have been largely welcomed by the industry, despite the long delay.

Set for announcement earlier this year, the draft Bill published in Parliament only last week followed proposals outlined in the government’s Water White Paper – Water for Life - set out last year (see Water & Wastewater International story).

If the latest proposals go ahead, all businesses and public sector bodies in England will be able to switch their water and sewerage suppliers, like with electricity providers.

Following Scotland, it is hoped this move will allow businesses to obtain more competitive prices and foster innovation among utilities.

Evidence suggests that opening up the water market and allowing businesses to switch supplier could deliver benefits to the economy of £2 billion over 30 years. In Scotland, after similar reforms were introduced, the public sector alone is set to save around £20 million over the next three years.

Currently, businesses with offices across the UK can choose a utility in Scotland yet are restricted in England to the utility operating in their area. The regulatory changes, if successfully approved, would allow the business to choose a single supplier for all operations across the UK.

Caroline Spelman, secretary of state for environment, said: “This draft Bill will create a modern customer focused water industry and for the first time all businesses and other organisations will be able to shop around for their water and sewerage suppliers. By slashing red tape we will also stimulate a market for new water resources and incentivise more water recycling.

“This will ensure that the water industry continues to provide an affordable and clean water supply which is essential for the nation’s economic growth while at the same time protecting the environment for future generations.”

Regina Finn, Ofwat chief executive officer, said: “This Bill is good for the customer, the economy and the environment. As well as, for the first time, giving choice to 1.2 million businesses and other organisations, the Bill is expected to benefit the economy by almost £2 billion. The reforms will help the country become better at valuing, managing and using our water. Now is the time for all players to step up to the plate to deliver the vision of the Bill – including the industry, regulators, consumer bodies and Government.”

The draft legislation will remove current regulations which act as a barrier to new entrants wishing to enter into the water and wastewater market. Currently any new entrant needs to negotiate with up to 21 water companies before entering the market. Under these changes there will be no need to do this as Ofwat will set out standard terms and conditions for companies to follow. It will also encourage existing companies to look at offering alternative supplies and services.

The Environment, Food and Rural Affairs Select Committee will now review the draft Bill over the coming months.

CIWEM agrees with the principle of better regulation and wider competition as set out in the draft Water Bill.

Nick Reeves OBE, executive director at CIWEM, said: “Even if more competition in the sector does not encourage customers to switch suppliers on the scale predicted, water companies should be encouraged by the existence of competition to improve and innovate their levels of service.”

Bill Easton, utilities director at Ernst & Young, said: “We suspect that business customers, who have already benefited from retail competition in Scotland, will still wonder why they have to wait five years for largely similar arrangements to be delivered in England and possibly Wales.

"It is vital that the new high-level group leading this work ensures that all parties are quickly aligned on the necessary roadmap and timeline, as well as making sure that the work does not take any longer than necessary.”

The draft bill is available to view at http://www.defra.gov.uk/environment/quality/water/legislation/water/

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