Water UK

A formal governance framework is essential to extend competition successfully

18/12/09

Twenty years after privatisation, the water industry remains committed to building on a successful record by continuing its development.

The growing expectations of consumers and society - better customer service, enhanced environment protection, faster adaptation to climate change – require that companies adapt their strategies and ways of working. The extension of competition for the benefit of customers could contribute to this evolution.

Competition is a process of discovery that follows a perpetually re-invented model. Water UK is pleased that this inherent uncertainty has been recognised by the Cave review and the government. Both insist that a step-by-step, or phased, approach is the right way to go.

Water UK Chief Executive Pamela Taylor said:

"The government must now create a strong framework that will support a phased approach to competition.

"What society wants from its water industry is sustainable services, in other words a reliable supply of high quality drinking water and failsafe sewerage. Everyone knows that the industry's work is essential to a healthy environment, a successful economy, and a good quality of life.

"It follows that there must be true democratic accountability for the way the water sector develops. For competition to support government's objectives for water, Parliament must determine a specific regime of statutory governance.

"Just giving Ofwat broad enabling powers to extend competition won't provide adequate governance, but will increase regulatory risk and lead to unnecessary extra costs that will affect everyone."

Specific provisions

Water UK is calling on Parliament to make specific provisions for a governance framework that:

 •  promotes efficient competition and innovation
 •  upholds all Ofwat's duties
 •  protects customers not in the competitive market, and
 •  supports good regulation principles which are essential for maintaining the industry's access to cost-effective sources of finance.

Water UK response

Consultation on the Cave Review of competition and innovation in water markets

For more information please contact:

Water UK Communication
020 7344 1809 (out of hours 07833 450544)