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PN 41/07 | 13 November 2007 |
Ofwat rejects criticism from House of Lords |
Ofwat will consider carefully the conclusions and recommendations of the House of Lords Committee on regulators announced today, but it rejects the suggestion that the failure of competition to develop in the water sector has arisen because of Ofwat's interpretation of legislation.
Regina Finn, Ofwat Chief Executive said "Ofwat has been working within a very restricted regime to try and promote the development of vigorous competition in the water sector. That regime only creates the potential for fewer than one water customer in ten thousand to choose their supplier. With such a restriction it is impossible for the water sector to be as competitive as energy or telecommunications."
Laws governing water competition mean that only around of 2,200 customers to be eligible to switch to a new supplier. This means that over 23 million customers cannot by law choose their supplier.
In addition, legislation designed to enable competition in the water sector came into effect in December 2005 – less than two years ago. Similar legislation enabling competition in energy came in over 17 years ago. A framework for introducing competition in telecoms came in 23 years ago.
Ofwat is carrying out a wide-ranging consultation on how to open up the water market to competition. It will be publishing its recommendations on how to improve the current regime in December.
Regina Finn said "We are pleased that the Chancellor, in the pre-budget speech, announced the Government's intention to review competition in water and we know that Defra Ministers are open to considering our suggestions on ways to best develop competition in customers' interests, including the interpretation of rules on access prices."
The regulator's response follows criticism from the House of Lords Committee on Regulators that it needed to do more to promote successful competition within the water industry.
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