Severn Trent, the Ftse 100 utility, is pushing parliament and the Conservative opposition into a radical rethink over water supply.
The company has written to the Environment, Food and Rural Affairs (Efra) select committee and the Shadow Efra Secretary, Nick Herbert, ahead of the flood and water management Bill. Severn Trent is lobbying for its trading model concept to be included in the legislation.
Andrew March, the water company's public affairs manager, said that utilities should move most of their water capacity nearer to their boundaries with rival groups rather than concentrating supply in the centre of their jurisdictions.
This would mean in times of drought it would be easier to provide water supply to areas that are run by utilities facing a chronic undersupply.
Mr Marsh admitted this could add 20 per cent to the cost of moving water from one network to another, due to the investment needed to introduce new infrastructure. The company has estimated that moving water would cost £1.20 per cubic metre, compared to about £1 today.
However, it would mean that utilities did not have to resort to creating and funding additional reservoirs.