Two main forms of competition to the status of incumbent water undertakers currently exist for public water supplies. One was initially enabled through the Water Industry Act 1991 in the form of ‘New (inset) appointments’, which provides the framework for new entrants to be appointed undertakers and replace another as the supplier of water and/or sewerage services within specified geographical areas. The minimum criteria, of which at least one must be met, for an appointment to be considered are:
- The consent criterion, where an existing undertaker consents to the appointment
- The unserved criterion, where an appointment is for an area in which none of the premises are currently served by an appointed undertaker. This includes areas currently supplied by an unregulated or private supply.
- The large user criterion, where an appointment is for an area in which individual premises are supplied with at least 50 Ml of water in England, or 250 Ml of water in Wales, in any 12 month period.
The second form of competition is Water Supply Licensing (WSL), enacted by the Water Act 2003. The WSL framework allows Licensed Water Suppliers to supply water to non-household customers using at least 50 megalitres (Ml) of water per year using either:
- A retail licence, which enables the holder to purchase a wholesale supply of water from an undertaker and then retail it to an eligible customer, or
- A combined licence, which enables the holder to introduce its own water into an undertakers supply system (often referred to as Common Carriage) in order to retail it to an eligible customer.
The Water Act 2014 established the framework to expand the market to all non-household customers in England (in Wales the 50Ml use requirement remains). This will allow 1.2 million businesses and other non-household customers of providers based mainly or wholly in England to choose their supplier of water and waste water services from April 2017. Retail services include things like billing and customer services.
The new market will be the largest retail water market in the world, delivering around £200 million of overall benefit to customers and the UK economy. We have worked with Open Water (the programme of work that brings together all of the key organisations to design and deliver the new market) to develop a suite of statutory codes governing the relationships between customers, wholesalers and retailers to ensure that this market change does not allow a reduction in confidence that non-household customers have in their drinking water supply.
Applications for New appointments and Water Supply Licences are made to Ofwat the economic regulator. DWI also has an important role in the application assessment process and Guidance on New (Inset) Appointments has been issued detailing what this role encompasses, as well as the prevailing regulatory requirements and responsibilities of inset appointees in relation to drinking water quality. Similar guidance has been issued in relation Water Supply Licensing. This is currently being updated.
Competition in the water industry in England and Wales is currently in a state of development and Ofwat is actively reviewing the current arrangements in England and Wales. Further information can be found here.
An independent review of competition within the water industry was led by Professor Martin Cave of Warwick University. The review made a number of recommendations to the UK and Welsh Assembly Governments and regulators, which, if adopted, could significantly change the competition arrangements. The UK Government recently consulted on the Cave Review's recommendations and a copy of DWI's response to the consultation can be downloaded here (PDF 206KB).
As the regulator of drinking water quality for England and Wales, DWI supports the implementation of all approaches that deliver improved drinking water quality as well as long-term benefits to consumers and the environment. DWI does not practice any preferences, prejudices or discrimination whilst fulfilling its regulatory role, and requires, monitors, reports and enforces upon the same duties and responsibilities of all ‘relevant persons’ engaged in the supply of drinking water.
A list of current appointments can be found here.
Page reviewed: 18 February 2016
Page modified: 21 September 2016