Press Releases 2008

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Statement on Cave’s ‘Independent Review: of competition and innovation in Water Markets' in England and Wales

18 November 2008

Statement from the Water Industry Commission for Scotland on Cave’s ‘Independent Review: of competition and innovation in Water Markets’ in England and Wales.
 
Today’s release of the interim report into Martin Cave’s ‘Independent Review: of competition and innovation in Water Markets’ recommends the introduction of competition for non-domestic customers in England and Wales, following the example set by Scotland in April of this year. 
 
Since April 1, organisations in Scotland have been able to choose who supplies their water and sewerage systems.  These non-household organisations in Scotland are the first, anywhere in the world, to have such genuine choice.
 
Alan Sutherland, Chief Executive of the Water Industry Commission for Scotland (WICS), comments on Cave’s interim findings: 
 
“We applaud Cave’s findings in favour of the introduction of competition for non-domestic water customers in England and Wales and believe it will encourage much needed innovation and bring wide-ranging environmental and cost-saving benefits.
 
“Given the size and complexity of the water industry in England and Wales, the introduction of competition will take some time to achieve and we believe that Cave’s proposed model of a step-by-step introduction will be most effective in constructing this competitive framework.  This approach will also ensure that no single group of customers need be adversely affected during the introduction of competition.
 
“However, we believe strongly that setting thresholds may disadvantage precisely those customers that they are designed to protect and, moreover, experience in Scotland suggests that owners of smaller premises can access lower prices and reduce their administration costs by reducing the number of bills that that they currently receive.  
 
“In Scotland, experience tells us that companies who sense their monopoly is threatened will exaggerate the difficulties and challenges of introducing competition and downplay the benefits.  But these objections are without foundation in less than eight months, approaching one third of businesses in Scotland have changed, reviewed or renegotiated their supplier as a result of the introduction of competition.
 
“Furthermore, we recommend that regulators set proactive formal deadlines and objectives – our experience in Scotland has shown this to be important in securing change.  It is this pressure which led to Scottish Water embracing the changes and which resulted in the substantial benefits being enjoyed by so many businesses.
 
”We have proven that competition in Scotland works and delivers tangible benefits for everyone.  But delivering real change that is in the interests of customers needs vision and commitment from all parties.  We believe that England and Wales can also benefit from such an approach and we look forward to seeing Cave’s full report and recommendations in 2009.”
 
ENDS

To find out more about the new competitive landscape for businesses and public sector bodies visit www.scotlandontap.gov.uk

For more press information please contact:
- Helen Prowse or Julie Fourcade, 3 Monkeys Communications, 020 7009 3100
[email protected]
- Katherine Russell, WICS’ Director of Corporate Affairs, 01786 430 200

Notes to editors:

1. The Water Industry Commission for Scotland is the economic regulator of the Scottish water industry. It has a statutory duty to determine price limits for Scottish Water based on the lowest reasonable cost of achieving ministerial objectives for the water industry. In November 2005, the Commission determined price limits for water and sewerage services for the regulatory control period 2006-10. A document setting out WICS’ full determination is available at www.watercommission.co.uk.

2. Since 1 April 2008, all business customers and public bodies, such as, local authorities, hospitals, schools etc are eligible to switch water supplier. The framework for competition is set out in the Water Services etc. (Scotland) Act 2005. The 2005 Act required WICS to establish a regime to license new entrants into the market, and facilitate the orderly opening of the market. It also required Scottish Water to establish a separate retail entity (now Business Stream) to serve non-household customers in Scotland.

3. End customer charges continue to be protected. All the water supply companies are obliged to offer customers

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