Ofwat tells water companies to be more efficient
18th May 2016 | Water
In April 2017, the water industry in the UK will deregulate meaning that, in the short term, commercial customers will be able to choose their water and sewerage providers, rather than have to be served by their local monopolist. This will mean competition from existing suppliers (and new market entrants no doubt), which should mean service improvements and cost reductions.
Energy companies went through this some time ago and the market share of the Big Six has been gradually eroded by newer, nimbler, more customer focussed companies entering the fray. Cathryn Ross, Ofwat chief, is starting to put the pressure on water companies to up their game. Indeed they are facing greater challenges – population change, climate change – but Ross wants prices to fall by 5% in real terms by 2020, with more cuts expected to follow. And improving efficiency is where they should start.
At present, there are 17 major water companies in the UK, compared to the Big Six energy providers and five main broadband providers – will it mean that there will be mergers? Already there has been talk of Severn Trent and United Utilities combining, and it will be interesting if there are other similar tie-ups.
One thing is certain, however, and that is that the newer, hungrier water companies will force the established players to up their game, by offering better service and price than the established players.