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Effective competition across the water sector in England and Wales will lead to greater benefits for consumers in the future, driving dynamic efficiency and spurring innovation in a way that regulation generally cannot. Keith Mason, Director of Regulatory Finance and Competition, said: "Competition in other utility sectors has lead to lower bills and improved service, enabling the withdrawal of regulation where markets become effectively competitive." The main changes proposed in today's paper are to:
Ofwat proposes that, initially, the current 2,200 customers eligible to change water supplier should be increased to include around 27,000 non-households, rising to all 1.2 million non-households in the near future. Greater flexibility in how access prices should be set is also proposed, which requires a change to legislation. Mr Mason added: "We welcome the Government's commitment to a review of competition and we would like to see the proposals we are making in this paper and the forthcoming paper in spring 2008 taken on board in that review. "Government can expand the market and amend the access pricing regime, both of which will improve the prospects for the development of greater competition in this sector." A consultation launched in July called for debate on a wide range of options to help promote the development of a competitive water and waste water sector. Following from that consultation, today's proposals represent the conclusions of Part One of Ofwat's competition review, focusing on making the WSL regime more effective and developing greater transparency in the market by implementing accounting separation by appointed water companies. Part Two of the competition review will follow in spring 2008, and will consult on proposals for wider changes to the industry. Notes to editors 1. The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. It exercises its powers in a way that it judges will allow companies to carry out their functions properly, and finance them. Its duties include protecting the interests of consumers, wherever appropriate by promoting effective competition. The Water Services Regulation Authority succeeded the Director General of Water Services on 1 April 2006. 2. The consultation document, called 'Market competition in the water and sewerage industries in England and Wales – Part one: Water Supply Licensing, and an open letter to stakeholders can be found on our website at www.ofwat.gov.uk. 3. Views on the consultation paper are invited until 10 March 2008. However, the recommendations covered in chapter three of the paper mainly confirm the position set out in the July paper. That wide-ranging consultation received much positive support from respondents. In the light of this support and in the context of little progress in WSL competition so far, we want to press on with our proposals as quickly as possible. Therefore we invite further views on the recommendations that are set out in this paper by 8 February 2008. 4. The Costs Principle sets the parameters for calculating access prices. It describes the revenue relating to certain relevant costs and returns that appointed water companies can recover from licensed water suppliers. This includes the direct costs of providing access, such as capital costs and the expenses incurred in performing statutory functions. Media enquiries to Ofwat Press Office on: 0121 625 1416/1496/1442 Out of hours enquiries to: 0121 625 1300 Ofwat publications and press notices can be found on Ofwat's website at www.ofwat.gov.uk  | ||||||
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