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Government looks again at ways of providing water choice
Friday, February 29, 2008
The Government is to look into the possibility of allowing households to choose from a selection of water suppliers under proposals to be outlined today.
Unlike in the gas and electricity markets, at the moment consumers must use their regional supplier, such as Severn Trent or Thames Water, which supply all households that fall within their areas of operation.
The review will be unveiled tomorrow by Hilary Benn, the Environment Secretary, and has been commissioned by the Treasury and the Department for Environment, Food and Rural Affairs. It will be headed by Martin Cave, a professor at Warwick Business School.
It is not the first time the Government has examined whether it would be feasible to open up household water supplies to competition but after an inquiry in 2002 it was considered to be impractical.
A Government official said yesterday: “It would be extremely difficult. Say, for example, I live in Ealing, I couldn’t very well get by water from Yorkshire. If you live on a border it is perhaps a possibility.”
She added that the review would also look into the practicality of allowing businesses to choose their water supplier. “It is much more relevant to businesses that use a large water supply than households,” she said.
However, Ofwat, the water regulator, has asked the Government to take a second look because of changing circumstances.
In 2003, legislation was introduced seeking to open the market up by allowing customers using more than 50 million litres a year to choose to switch suppliers.
Seven companies, including Aqua-vitae, have been granted licences to supply water but no customers have yet switched.
However, Ofwat has suggested that the situation could change if the market was not restricted by the larger companies and is urging the Government to reduce the threshold for customers from 50 million litres of water a year to 5 million litres.
The review will be carried out at the same time as Ofwat continues to consult on two key proposals to increase competition in the water industry.
From Times Online
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