There was an interesting meeting of the European Policy Forum last evening. Perhaps it was inevitable on a day that a drought was announced in the South East of England, but rather than focus on the substantive issues that will empower customers (choice and incentives to reduce costs to supply), most of the discussion surrounded increasing upstream competition or debating whether collaboration becomes impossible when competition is introduced.
There are three things that strike me from this debate on upstream reform.
First, we may have surveyed or consulted customers – but we have never truly empowered them to make decisions. Certainly, in Scotland, our understanding of what customers want from their water industry is now quite different to the period before the market opened. Their actual choices appear to be different from the conclusions of surveys. Customers are keen to work with their retailers to reduce their environmental footprint and would be open to more innovative and cheaper solutions. Experience shows, however, that such initiatives take time to progress. How do we ensure that upstream reform is consistent with the expectations of customers? We should always remember who pays the bills.
Secondly, is water trading (or the agreeing of bulk supplies at it used to be called) competition? There were some who appeared to argue that it was. Could it not, however, be the result of a collaborative approach and the conclusion of a mutually beneficial agreement between two water companies? It would seem to me that the latter approach does not risk becoming a zero-sum game. A more adversarial approach would offer no such guarantee.
Thirdly, it is unhelpful to think of water resources in a vacuum. The management of drainage and waste water has to be considered. Waste water not only contains potentially valuable heat and minerals – it could also relieve pressure on raw water sources.
There is clearly a need for better definition of the issues. We all agree about the importance of resilience and affordability – the themes of the Government's White Paper –
but we will best achieve these aims by working collaboratively.