Ofwat outlines retail competition scenarios for households in England
A separate household retail market, auction-style competition, and an extension of the approach being implemented in the non-household retail market are among the scenarios being considered by Ofwat for providing competition for retail water services to domestic customers in England.
The scenarios are included in the regulator’s draft terms of reference, announced today (January 15), for reviewing the costs and benefits of providing competition for retail water services to household customers in England.
The government announced last November its decision to look into the benefits of competition for households in England, asking Ofwat to carry out a review and report back in the summer. Ofwat said the review will consider the opportunities for introducing competition regarding the provision of water and sewerage services to households.
The review will follow three key principles:
- The decision on whether, in what form and on what timeline the household retail market in England will be opened to competition is a matter for the government
- Assessment of the costs and benefits of extending retail competition to households will be evidence based
- Ofwat will follow an open and transparent process, seeking evidence and ideas from those in the sector and beyond
Ofwat said it wants to get an understanding in number of areas including:
- The views and likely behaviours of customers in respect of choice in water and wastewater retail activities
- Benefits to customers, the wider UK economy and the environment
- Issues that might inform the assessment of costs and benefits
- Potential models for implementing any reform that are possible scenarios for the range of costs and benefits
The regulator wants to set out the overall potential costs and benefits for scenarios of household retail competition; specific issues for implementation that affect the scenarios; and the options arising for different scenarios.
Cathryn Ross, Ofwat chief executive, said: “Business customers and other organisations will be able to choose their retail supplier from April next year. There are 18 times as many household customers in England who could also potentially benefit from a well-functioning market. Yet we also need to identify the barriers to getting a better deal for customers and making sure all customers’ interests are considered.
“Opening up choice is a decision for government. We have committed to a rigorous review that is open, transparent and evidence based. We will look to learn from other sectors and want to hear a wide range of views. This will be crucial in delivering a comprehensive review that takes full account of the best interests of customers and wider society.”
Ofwat plans to publish its initial findings in July 2016, with the final report submitted to government in September 2016. Once the review is complete, the government will decide if and when it wants to give household customers a choice.
It expects to be able to factor the government’s conclusions and decisions into the 2019 price review.
- Plaid Cymru criticises Labour over Welsh water control vote Plaid Cymru MPs have hit out at the Labour Party for "failing to protect Wales' natural resources" by abstaining... Read More >
- Shared risk needed More integration and shared risk is needed to sustain greater efficiencies in the water sector, say contractors. The... Read More >
- SWW and flood defences are winners in Spending Review South West Water will have extra funding available for the 2015-16 financial year to help reduce customer bills as part of... Read More >
- Comment: What could retail competition do for customers? Domestic retail competition could provide an opportunity to look again at how we determine the price of water to the... Read More >
- Comment: Sludge all set for reform The opening of the bioresources market presents water companies with an opportunity to do things differently, but what... Read More >
- Interview: Ben Jeffs, Chief Executive, MOSL “The whole industry has really mobilised around market opening, and the water companies deserve credit for that.” Read More >
- Close-Up: Who will be the big fish in the new water retail market? With a £2.5BN new market for non-domestic water retail to open in England in April, joint ventures, incumbents and new... Read More >
- Water Industry Procurement: could Brexit provide a fresh start? Could Brexit lead to a re-examination of the procurement rules which govern the water industry and other infrastructure... Read More >