'Health risk' in water competition

COMPETITION IN the water industry could put the health of millions of people at risk and lead to huge rises in bills for rural customers, Britain's water companies warned yesterday.

In a letter to the Government the industry body, Water UK, sharply criticised proposals by Ian Byatt, director general of the regulator Ofwat, to open up the market for water.

They also attacked the regulator for not discussing his ideas with the industry.

Mr Byatt has said in recent press interviews that he wanted to introduce more competition among privatised water firms, mirroring similar moves in the gas and electricity markets.

The water companies argued that Mr Byatt's intention to set up "common carriage" - allowing companies to pump water into a rival firm's pipelines - for large business customers could lead to a deterioration in water quality.

They said that the risk of the outbreak of diseases would be increased by the mixture of different types of water in the pipes and by the arrival of new entrants in the market with less demanding safety standards.

Brian Duckworth, the chairman of Water UK and managing director of Severn Trent Water, said: "I just don't want any Tom, Dick or Harry to have access to my pipeline and pump water which is below [the standards] my customers would expect."

He added that common carriage would make it impossible to find the guilty party in case of a health scare.

Mr Duckworth said he was "angry" at Mr Byatt's refusal to discuss his proposals with the industry.

The water companies also said that common carriage would be impossible without the establishment of a national grid, similar to the one in the electricity industry, which could cost up to pounds 6bn.

An Ofwat spokeswoman rejected Water UK's criticisms. "We know there will be hurdles to the introduction of competition, but we do not believe they are insurmountable."

Water UK also maintained that the presence of more than one supplier could lead to a rise in bills for customers in rural areas where distribution costs are higher.

They claimed that Mr Byatt's proposals would allow new entrants to "cherry- pick" lucrative customers such as big factories and hospitals, leaving existing companies with the more expensive ones.

"Rural customers would undoubtedly have to suffer a large increase in bills," Water UK said.

The latest spat between the watchdog and the water firms came as Ofwat gave permission to Thames Water to supply water and sewage services to the town of Tidworth, Wiltshire, an area covered by rival firm Wessex Water.