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How could a greater choice of water suppliers benefit you?

water from tap

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?

M J Davis says:
25 September 2016

My water company has admitted that their IT system is not fit for purpose and they have difficulty when I change bank accounts. This is because they have no competition. All shares in the company are owned by a pension fund in California. The regulator is far too soft and the profits are big and secure. The companies should be publicly owned not for profit organisation.


That M J Davis is a major point English water is owned by foreigners . While some may say the US arent foreigners thats how they view us. In any case you have only to look at Scotland for an entirely different political / social,policy . Scottish Water operates under the -Water Services ( Scotland ) Act – 2005 and the Water Industry Commission for Scotland . It was founded in 2002 by an Act of the Scottish Parliament — because 100 % of it is owned by the Scottish Government it is considered a statutory corporation . Emotions ran high in Scotland as to the ownership of water it is such a life giving , vital thing that the Scots were “up in arms ” at foreigners owning their water . As M J Davis says — the companies should be publically owned , I agree , why should political dogma stop the English public owning its own water ?


I have no territorial concerns about the temporary ownership of our water; it all comes from rain that falls over England . I also have no objections to our sewage being in the hands of foreigners – in fact, I recommend it.


This raises some interesting possibilities. As in energy, there is no reason why our water should not be bought, marketed and sold by companies that have no experience of treating and supplying water and disposing of waste water; they would leave all that difficult stuff to the existing water companies who could even come out of the customer supply business altogether and concentrate on the production, distribution and disposal side. Residents could have a choice of Tesco Water, Waitrose Water, or Amazon Water, etc. The product would be the same but the customer service would differ. Competitive pricing would depend on which water supply companies could amass a sufficient customer base to enable them to procure the greatest volume of water at the lowest price from the water producers.

One drawback is that there is not a national water network and there are big differences in the storage and distribution costs across the regions so it would be difficult for the supply companies to spread the economies of scale or the benefits of greater volumes of water from one part of the country to another. With electricity, for example, a company focussing on green energy can feed in any amount of its green electricity at one end of the UK [Scotland, perhaps] knowing that an equivalent wattage of electricity can be consumed anywhere else in the UK. This would not be possible with the present water networks and all feed-ins in one region would have to be matched by an equivalent consumption within the same region. That is not as efficient and could inhibit competition.

And who would decide on hosepipe bans? And what effect would they have on the economics of the supply companies? At present, with vertically integrated production, distribution and disposal operations, any loss of supply volumes due to water restrictions are contained within the overall cost profiles spread across very large regions.

There are at the moment a number of independent water supply companies operating in various towns or geographical areas with protected monopolies. They don’t generally deal with waste water which is the responsibility of the regional water company. However, I could foresee such local companies being wiped out by the new ‘national’ water supply companies. There would need to be some controls built in to ensure that residents in those areas were not left high-&-dry in the event that the local companies lost so many customers that they could not carry on trading. It would be necessary to ensure that another production company was able to take over their reservoirs, treatment plant and water mains in order to maintain continuity of supply.

I think the costs of marketing water, managing switching, and the usual salami-slicing of tariffs and bundles, would add costs into the equation that are not there at the moment.

Sometimes things are best left undisturbed.


From the Which? Press Office 19 Sept.
“Alex Neill, Which? Director of Policy and Campaigns, said:

“Giving people a choice over who supplies their water could lead to a better experience for consumers but any plan to open up the water market must learn the lessons of other utility markets. The Government should now consider whether a competitive water market would deliver better outcomes for customers.”

I have some difficulty understanding how real competition could develop without a national grid of water supply, let alone water treatment. With electricity we have a national network of supply wires, into which anyone can feed a supply, either directly or through an existing generator. But how would it work for water?

Given the apparent stickiness of consumers in not taking advantage of better energy deals, just how much effort are they going to make on their much lower water bills?

A “better experience for the consumer” sounds just like those vacuous marketing ploys; just what does it mean? If we mean cheaper bills, and explain how, then lets say so. Otherwise…..?


If you are a one person or two person family the answer is change to a water meter. I am with Welsh Water/Dwr Cymru and I changed along with a few neighbours about 5 months ago, my water bill has reduced from £60 per month [standard payment] to £40 per month and has now further reduced to £25 per month and that is standard everyday use. the installation of the new water meter was free. Got to be a consideration if there is just a few of you at home.


Excellent comments from John Ward, perhaps he should replace OFWAT as he seems to talk more sense.
However, I don’t quite agree with the view of leaving the current status quo as is. The electricity/gas market is not a panacea and lack of engagement of the masses to switch does not help. Even so, the water industry is falling behind expectations today, and the fact so many water companies are owned by non-UK entities shows there is money in water.
There is a lot to sort out and ideally a national water network would be an outcome. A modern society should have the means to distribute life sustaining water from where it is plentiful to where it is most needed. After all there are plenty of ancient civilisations that managed it.


So lets get this straight – you are all against a national . government controlled water supply ? You are quite happy foreign countries and in some cases ( France ) owning parts of British Utilities ? But you are unhappy that Water has not been universally sold off in Britain –those dastardly Scots always “bucking the privatisation system ” . Do none of you remember that the government has already thought of that and —announced it would (in modern terms ) cost what the Trident renewal would cost—and MORE ! The logistics are enormous , it was “knocked back ” . This is interesting – I would like to hear from the 99 % of the English public if they agree with this and that I am the only one not happy with the present situation.


I don’t think a nationalised water industry is on offer, Duncan. And England and Wales have never had a unified state controlled water service. When the regional water authorities were set up [some time before they were sold off to the public] they took over hundreds of municipal and independent undertakings which were often poorly managed and not very advanced technologically. There was a backlog of maintenance and investment requirements and in some areas the quality of the water was dubious and the state of the beaches appalling because of raw sewage outfalls. Whatever we might think of the current private water companies [and they are not all foreign-owned] they have at least led to substantial improvements in water supply and sewage treatment. Nevertheless, not all is right: there are major price disparities across the country and the companies are too remote from their customers and obstructionist in their attitude [perhaps with good reason, but they need to explain themselves and not take advantage of their monopoly position].

I don’t think the question of of the water industry becoming a nationalised industry has ever arisen and i doubt there is any chance of it now. Personally I think it would be the worst possible outcome.


What really bothers me John is that we are talking about rain that comes down from the sky that is vital to keeping us alive and to think that our life is in the hands of overseas investment companies doesnt bring “joy to my heart ” . If nationalisation is out of the question then ,at the very least .WE the public should have our water supplied by an English company . Wasnt that one of the reasons for a majority Brexit vote ? , no longer controlled by the EU and the chance for more British industry to be set up. Its bad enough that large areas of Wales and Scotland are owned by overseas pension funds or investment bankers or their clients , this has hampered companies like BT from gaining access to land in North Wales to lay cable and poles and even cabinets . The Scottish government has recognised this and is drafting and bringing out legislation to force the landowners to reveal themselves , in a form of a Scotland Act, it is being vigorously opposed by absentee land owners. This country doesnt belong to us any more its owned more and more by non- British citizens , its time we took it back . The American government isnt stupid they legally own the land under the feet of any US landowner so that any minerals/ oil/gas etc is directly under the control of the US government not those with property on the land. If they refuse to sell the government can compulsory offer a small amount of compensation and take it anyway chucking off the so called US landowner so foreigners never really own American land although , amazingly Britain holds ownership/control of many US businesses that sit on US land . Many US farmers have lost their land to massive US government backed oil/gas companies.


I sympathise with your point of view, Duncan, but we are where we are. I think it would be impossible to turn the clock back now. Surely, one of the chief points made by the Leave campaign was that the UK would have no difficulty in forming trading relationships with countries around the world because of our open outlook towards inwards investment. What does it say about a country that has pension funds from California and Canada queuing up to buy stakes in our utilities? The Brexiteers consider that a tribute and a sure sign of a prosperous future.

So far, under the private and public limited companies that operate our water and waste water services, there has been security of supply, very few water quality breaches, fewer burst water mains, and far less sewage pollution. The last major water contamination incident was at Camelford in 1988 in the region of the South West Water Authority [a public service organisation, not then a private company]. Yorkshire Water had a serious E.coli outbreak near Doncaster last year but such events are now uncommon and the company dealt with it capably and expeditiously. Yorkshire Water also suffered a water shortage emergency over twenty years ago because of drought conditions in the west of its region and had to ship water in tankers to meet demand; the company has subsequently built an east-west pipeline to balance reserves in the event of a future water shortage. I question whether a nationalised industry structure would have dealt with such an emergency proficiently and found the capital required for a long-term solution.

Utilities are reliable if unspectacular investments which is why they appeal to pension funds and other long-term investors. Their dividend yields are normally around 4% which is not a great return on capital but it is reliable because of the essential nature of the products and services supplied. The investors in utility companies are not looking for excitement so they are content to have a board and management that gets on with the business in an efficient and responsible manner with no surprises. The foreign capital that has come into the water industry has not given rise to the naked greed seen elsewhere in commerce and industry. Obviously, there is the question of the abstraction of profits to other countries but I hardly think the UK can complain about that having for centuries had an established profit-taking operation [and sometimes several] in virtually every nation on earth. If we are going to make Brexit work for Britain we have to keep the door open to foreign investment otherwise we will never negotiate any reciprocal deals abroad.

Bishbut says:
26 September 2016

I have two companies,one provides clean water the other deals with waste water .But I only receive one bill from the clean water provider. Baffling at times


The amount charged for waste water disposal is based on a percentage of the amount of clean water supplied. The company that deals with the waste informs the supply company how much it needs to collect per thousand litres and this is combined in one bill. This is similar to the case where one water company both supplies water and disposes of waste – the two charges are shown separately but combined in one bill. It is also similar to the Council Tax bill where the amounts required by two or more authorities are combined in one bill.

I had hoped that with a dual-fuel tariff for energy there would be one bill for both gas and electricity but this has not happened due to a lack of joined-up administration.