Mr Byatt believes that he should continue because of fundamental changes facing the industry, including the trend towards takeovers and mergers and the wider debate over the future of regulation as whole.
Water has been at the centre of controversy since the government sell- off because of bills soaring well above inflation, driven partly by European rules on quality and the environment. Mr Byatt was at the forefront of the move to challenge the Government to assess the need for quality improvements and weigh them against the overall benefits for customers. He also urged water companies to find out what customers felt it was worth paying for and reflect this in investment plans.
The watchdog has also shocked some in the sector because of his interventionist stance on takeovers. He has insisted that mergers between water companies should not go ahead without an offsetting advantage such as sharp price cuts for consumers. In the case of mergers with electricity firms, he has said he will look to ensuring core water operations within an enlarged group have a separate stock market listing.
The industry has also attracted criticism over high dividends and boardroom pay. The row reached a crescendo over falling service standards during and following last year's drought.
Ofwat does not intervene in boardroom pay, but Mr Byatt has asked companies that had supply problems to make the necessary investment to prevent the situation recurring.
Ofwat confirmed that Mr Byatt "is prepared to stay in office" for another term. But a spokeswoman said that the decision was a matter for the Secretary of State for the Environment.
It is thought that although Mr Byatt is not without critics, he is regarded in Whitehall as a relatively sensible choice among the ranks of the regulators.Reuse content