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Today marks the start of the new water supply licensing regime in England and Wales. Ofwat has announced the first group of licensees who will compete with the existing water companies. Aquavitae (UK) Ltd, WaterCall Ltd and Severn Trent Water Select Ltd will have the opportunity to supply water to business customers who use at least 50 megalitres of water a year. A further six companies so far have indicated that they intend to apply for a licence from Ofwat to compete in the water industry. Around 2,200 businesses, who collectively spend around £210 million each year on water, will be eligible to switch their supplier - customers such as large health service trusts, big industrial plants and universities. But the competition regime will not apply to household customers or smaller businesses. Philip Fletcher, Director General of Water Services, said: "This is good news for large users as they will be able to choose their water supplier. "We expect new licensees will be companies who have a clear vision of the value they can add to customers' supply arrangements. We are likely to see a steady increase rather than a rush of new companies wanting to compete in the water industry. Household and smaller business customers, who cannot choose their supplier, will not be disadvantaged. "We have worked with key stakeholders to develop a robust and comprehensive regime for the benefit of customers, without imposing a framework that is too bureaucratic." As part of the preparation for water supply licensing, the existing water companies have published access codes and indicative access prices. Ofwat has reviewed the indicative access prices and where necessary asked water companies to make changes to their published information. Ofwat is also reviewing the access codes to check that they comply with its guidance. Notes to Editors: 1. The Director General of Water Services is the economic regulator of the water and sewerage companies in England and Wales. He exercises his powers in a way that he judges will allow them to carry out their functions properly, and finance them. He also has a duty to protect the interests of consumers, wherever appropriate by promoting effective competition. 2. As part of the preparation for the launch of the new regime, Ofwat has written to all potentially eligible customers to inform them about the new competition regime and where they can get more information. 3. 50 Megalitres equals 50 million litres, and is the equivalent of 50,000 cubic metres. It would take 2.5 Megalitres of water to fill an Olympic-sized swimming pool. 4. Ofwat has already changed the appointment conditions of the existing water companies to ensure they have arrangements in place that will enable their:
6. Ofwat has published key guidance documents on the new competition regime. These can be found on the WSL area of Ofwat's website. 7. Indicative access prices are estimates based on assumptions about the arrangements that new licensees will enter into. The actual prices that will be charged for individual access agreements will depend on the particular circumstances of the proposed supply and the individual requirements of the licensee. 8. An update to Ofwat's work in checking water companies indicative access prices and access codes is attached as an annex to the press notice. MEDIA ENQUIRIES TO OFWAT PRESS OFFICE ON: 0121 625 1416/1496/1442 Out of hours enquiries to pager: 08700 555 500 water 502/503. Ofwat publications and press notices can be found on Ofwat's website at: www.ofwat.gov.uk INDICATIVE ACCESS PRICES AND ACCESS CODES - UPDATE Introduction A key part of the new water supply licensing (WSL) regime is for appointed water companies to publish their indicative access prices and access codes for water supply licensees to access their supply systems. By 31 August 2005, appointed water companies had published indicative access price information. We reviewed this to check whether appointed water companies have complied with our guidance and asked most companies for additional explanations as part of this process. Following this, some appointed water companies have revised, or will revise, the information that they originally published. By 15 September, appointed water companies also published codes for access to their supply systems. We are reviewing these codes for compliance with our Access Code Guidance and other published guidance. Indicative Access Prices Indicative prices are only estimates, based on underlying assumptions about the arrangements that new licensees will enter into. The actual prices that will be charged for individual access agreements will depend on the particular circumstances of the proposed supply and the individual requirements of the licensee. Generally, we consider that the indicative access price information that the appointed water companies now provide appears to comply with our guidance. But we have asked some companies to:
We allowed appointed water companies to develop their own assumptions about the level of service required by licensees because we do not know what services licensees will require. Most have assumed that the service and therefore the associated costs would be reduced. However, two appointed water companies have made assumptions about the levels of service that have led them to offer zero and negative discounts on wholesale prices. Access Codes Overall, appointed water companies' access codes follow the format set out in the access code template, which we published in June 2005. We will be raising specific queries with the individual appointed water companies. If we conclude any of the appointed water companies have not complied with our access code guidance, we will ask them to revise their policies. For example, we will ask them to:
For the most up-to-date information, please see the Ofwat website, www.ofwat.gov.uk  | ||||||
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