28/11/08
The independent Cave Review of competition and innovation published its interim report on 18 November. It advocates a phased approach to competition and focuses on retail competition for business customers.
Water UK is pleased that the report argues that competition for business customers needs to produce identifiable benefits before it is extended to domestic customers, with the high cost that such an extension would entail.
The report also advocates the removal of the pricing regime for competitors which Parliament enshrined in legislation (Water Act 2003). Water UK is concerned that this legislative change will permit an increase in bills for domestic customers which will be used to finance the cost of introducing competition and to give business customers sufficient discounts to entice them to switch suppliers. This would be inefficient competition.
Of particular concern is that the government, in its Pre-Budget Report, has picked up the proposal to remove the pricing regime provided by Parliament but has not retained the valuable safeguards contained in the review report, namely that the new pricing regime should ensure efficient competition, ensure non-discrimination, enable the financing of networks and be cost-based, all objectives Water UK much supports.
Cave Review Interim Report 19/11/08
Contact: Jeanne Golay
