4 May 2007
Water supplier regulator Ofwat has declared that it is disappointed with the lack of competition within the industry and has requested feedback on some new initiatives it has designed to combat the stagnant prices.
Earlier this week Ofwat expressed concern at the decision of Kent Water and South East Water to join into one supplier, fearing that their customers would lose out on potential price reductions from rival suppliers if the market continued to amalgamate.
Ofwat believes that there are currently two main barriers preventing a competitive atmosphere; the Costs Principle, which requires companies to follow a very prescriptive method for setting prices; and the size threshold, which allows only commercial customers who use at least 50 million litres of water a year to choose their water supplier.
If more choices were provided to more commercial customers, this could lead the way for more water suppliers to enter the market, thereby increasing the level of competition and driving down the prices - which would have a knock on effect for consumers' water bills.
Keith Mason, Director of Regulatory Finance and Competition commented: "We have already recognised that the key barriers to competition are the Costs Principle and the size of the market. These require a change in the law but Ofwat is now proposing in these consultations to take some further steps under the current regime to promote competition."
© 2008 Adfero Ltd
Content for the uSwitch.com market news service is provided by a third party, Adfero Ltd. Whilst uSwitch.com makes reasonable efforts to check the reliability of this content, uSwitch.com does not guarantee the accuracy thereof or endorse the views or opinions given by Adfero Ltd, unless expressly stated otherwise.