Ofwat, the regulator of the water and wastewater sector in England and Wales, has published its review of the options for developing greater competition in the household water market. How does the Ofwat report lead to a benefit for you?
So what does this mean? Could we end up with five different taps in our sinks, or even one that provides sparkling water? Well, no, this is strictly about retail competition, ie, which company you pay your household water bill to and what extra services it could provide.
Ofwat and the government recognise there is largely a natural monopoly in water networks (the pipes that get water to you), so you needn’t worry that your streets are about to be dug up to lay different water suppliers’ pipes either.
Our response to the Ofwat report
Ofwat’s findings were mixed and, in some cases, unfairly ridiculed, in my opinion.
The first question most of us want to know is: ‘How much can I save on my water bill?’ Well, Ofwat’s analysis points towards a top-end saving of £8.
While this is rather modest, Ofwat has suggested that opening up the water market to greater competition would drive innovation and new ideas. And in my view, that’s where you’d see the most benefit.
What if one company could provide you with water, gas and electricity, so you’d only have to make one phone call to sort all your bills? How about an app to help you manage your account? Currently, only two of the monopoly water companies offer their customers an app, as Ofwat’s CEO Cathryn Ross pointed out on BBC Radio 4’s Today programme.
And as the latest figures from the Consumer Council for Water, which were published on Wednesday, show that complaints to water companies are on the increase, could a competitive market lead water companies to focus more on their customer service?
While water competition on its own doesn’t sound like an attractive deal for consumers, when you start to think about the new innovations, I wonder if it becomes more so?
Role of government
Ofwat has presented its report to the government, which must now look at it and make a decision as to whether it is worth developing greater competition in household water and wastewater services. This would put it in line with non-household customers who are due to get the choice of water suppliers from April 2017.
When the government makes its decision, it should weigh up the overall costs to customers and assess the overall outcomes for customers against those.
What do you think – would competition in the water sector make a splash, or sink like a stone?