Outlook: Water competition

THE IMPENDING arrival of the Competition Act has got all those watchdogs positively straining at the leash. Yesterday, it was the turn of Ofwat to bare its teeth even though it cannot start to bite any of the water companies where it hurts until next March.

Since water is as much a natural monopoly it might seem irrelevant to subject the industry to the rigours of a Competition Act. Not so, says Ofwat. There are plenty of ways in which competition among suppliers can be introduced.

When pressed, Ofwat cannot think of many instances where wannabe water suppliers are being ground under by the weight of monopoly suppliers. Nor, frankly, does it believe there is a vast underbelly of anti-competitive behaviour just waiting to be exposed once Ian Byatt can order dawn raids.

But that is not the point, Ofwat insists. The aim of the legislation is less to penalise incumbent suppliers and more to encourage new entrants to dip their toes.

The dam is not exactly waiting to burst, it has to be said. In the 10 years since the water industry was privatised, only four companies have applied for licences to supply customers outside their area and only one new competitor has entered the market.

But Ofwat reckons there will be a steady drip of new entrants coming on the scene, fortified by the knowledge that if the incumbents cut up rough, the regulator can always confiscate 30 per cent of their turnover.

Initially, the only consumers who are likely to benefit are those who use an awful lot of water, such as paper mills, where it pays to build a pipeline to supply them. But ultimately, Ofwat envisages whole housing developments being supplied by someone other than the local monopoly.

Crucially, its vision of the future relies upon the co-operation of the Environment Agency, with which relations have not always been warm.

The agency remains responsible for granting water abstraction licences and without a system for trading unused licences, backed by the threat of heavy fines for those who do not co-operate, competition will remain a damp squib.

u

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border