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Competition in the Water Industry part 3

In my last 'competition' blog I looked at some of the proposals in the UK. I will now consider what these may mean to industry and customers.

'Vertical separation' (meaning the accounting and often business separation of parts of a company's business) will mean in the case of a water company that elements such as customer services and billing could be open to full competition. In this regard it would be similar to the Energy market. At present the proposals for competition are limited to commercial customers (all supplied above a yet to be finalised daily volume).  Insets would be fully open for any customers with any supplier purchasing water and sewerage services from the incumbent Water Company at a common price, including the commercial arm of that incumbent Water Company.

This may lead to a number of significant changes, some of which are already being seen in practice:

  • Large national customers, such as supermarkets, may choose to use one supplier only;
  • Water Companies will seek to win commercial customers in other areas;
  • Other companies (e.g. other utilities, supermarkets, etc.) may enter the market.

Business (and potentially in the future domestic) customers will thus be able to choose their supplier, and this should drive down prices. However as well as benefits, there are issues and challenges with this change, that I will discuss in future blogs.

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