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Call to shake-up water industry
Thursday, April 23, 2009
A radical shake-up of the water industry could be set in motion if government accepts recommendations to overhaul the distribution, regulation and consumption of water in the UK, writes William MacNamara .
The government- commissioned Cave Report targets the UK's 21 regional water monopolies, claiming they will meet the demands of the population only if competition is introduced.
The report calls for businesses to be able to choose among water and wastewater retailers, instead of relying on the local incumbent with its Office of Water-sanctioned prices. "These measures will allow many non-household customers to choose the combination of service and price they prefer," the report says.
In addition, the conditions for mergers between companies should be relaxed, the report advocates, to encourage consolidation among providers. While mergers are, in effect, discouraged between water companies with annual revenues above £10m, that threshold should be raised to £70m.
"The introduction of market forces could drive companies to share water resources, limiting the need for new assets, keeping bills down and reducing any impacts on the environment," it adds.
The report, lead by Prof Martin Cave, puts the price tag of its recommendations at £2.5bn.
This story was first featured on The FT Website
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