Household Bills
Regulator backs more competition in retail water sector
Regulator Ofwat has called for more competition in the retail water sector in England.
It said greater competition could be worth almost £3bn and prevent water customers being “left behind in a retail revolution”.
Customers currently can’t choose their water supplier.
Ofwat said reductions in customer bills are possible but likely to be small, especially in the short term. The financial benefits from opening the market to competition could be worth £2.9bn over 30 years, which amounts to £8 per customer, per year.
However, greater competition could lead to innovation, improved customer service, new offers – including bundling of products such as energy and telecoms with water – and give customers the freedom to choose their supplier.
Ofwat said this would end “the final retail monopoly”.
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In its review of the market, Ofwat heard from potential new entrants who see the opportunity from a new market to provide retail services more efficiently, offer new products and services, and make customers’ lives easier.
Cathryn Ross, chief executive of Ofwat, said: “We are living in an age of retail revolution, but water customers are being left behind.
“The service offers from water companies can feel behind the curve compared to the innovation customers benefit from when buying other goods. The uncomfortable truth is that, when it comes to retail offers, water companies provide an analogue service in a digital age.
“Customers tell us they think they should have the freedom to choose and don’t understand why water is the only retail market in which there isn’t some form of competition.
“But, of course, this isn’t a one-way street. There are significant costs to be considered, and it will be important to ensure that customers are treated fairly in a competitive market and that vulnerable customers are protected. The decision for the government to make is whether the potential benefits outweigh the costs and risks.”
Ofwat has submitted its assessment to the government of the potential costs and benefits of opening the residential retail water market in England.
It is for the government to decide whether to introduce competition and, if so, how and when to do so.