UK government taps into water industry reform

Posted at July 16, 2012 » By : » Categories : News » Comments Off on UK government taps into water industry reform

The UK government yesterday unveiled its plans to reform the water industry, washing away unnecessary red tape, opening the sluice gates for new entrants and innovation in the market.

The proposals, which are now open for pre-legislative scrutiny, will allow businesses and public sector organisations in England to switch their water and sewerage suppliers from 2017.

The reforms aim to bring the water industry more into line with the energy market and other sectors, where customers can choose their suppliers to get better prices and improved efficiency and service.

According to the government, allowing businesses to switch water suppliers could bring economic benefits of up to £2 billion over 30 years.

Where similar reforms have already been enacted in Scotland, public sector customers are set to save around £20 million over the next three years.

Meanwhile, the bill also allows water regulator Ofwat to set out standard terms and conditions for water and sewerage companies, making it much easier to enter the market. Currently, any new entrant has to negotiate with up to 21 water companies first.

Improved competition within the market will also make water trading easier, so that companies can work together more readily to tackle issues like security or supply.

“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,” commented Secretary of State for Environment, Caroline Spelman. “By slashing red tape we will also stimulate a market for new water resources and incentivise more water recycling.”

Ofwat has welcomed the changes saying that they will be good for the customer, the economy and the environment.

But while financial consultant Ernst Young has also applauded the extension of retail competition to the water market, utilities director Bill Easton says many business customers in England will wonder why they have to wait five years to reap the benefits unlike their Scottish counterparts.

The bill does not, however, promise to open up the household water market to competition, points out Clive Mottram, head of water regulation at international law firm Eversheds.

And the proposals also go contrary to the parliamentary Environment, Food and Rural Affairs Committee and environmental groups, who are calling for more action on water metering and efficiency.

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Related stories:
UK government need to step up action on water metering, says Committee (6-Jul)
Europe must use water more efficiently, says report (15-Mar)
Efficient hot water boilers could save UK organisations £400 million a year (1-Mar)
Water efficiency lower down the agenda the climate change (17-Nov 2011)

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