21 December 2007
Ofwat has said that the current licensing regime for water supply should be reformed, in order to encourage competition.
By making firms compete more for supply contracts, the regulator said, customer service standards would be boosted through increased innovation and efficiency gains.
Under Ofcom's scheme, the government's Costs Principle - which determines the parameters of firms' access in each area - would be removed.
In effect, this would increase the number of customers eligible to switch between water firms - as they would not, in theory, be barred from serving anybody.
Similar measures have already been implemented in the energy sector, Ofwat pointed out.
Director of Regulatory Finance and Competition Keith Mason 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 government currently has competition standards in the water industry under review - and will report back on the issue next year.
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