The U.K. water and wastewater market has long been closed to competition. Twenty-two companies currently act as regional suppliers, providing water and sewerage services to populations in specified geographic regions of England and Wales.
In December 2005, the United Kingdom’s economic regulator of water and wastewater services, Ofwat, introduced competition to the industry with the intent of making customer service and pricing more competitive. The move granted new companies one of two types of license to offer water supply to eligible non-domestic customers:
- A retail license enables the licensee to purchase water from a regional supplier at an agreed rate, sell it to a consumer within their region and provide a range of customer services. The potential benefits to the customer are an improved level of service level and a discounted volumetric price.
- A combined license, which combines the retail license with the ability to transport water from different regions and alternative sources, such as boreholes, by leasing existing networks.
Ofwat has taken a structured approach to the introduction of the competitive framework. Potential licensees must have proven experience in the water and wastewater industry before they are awarded a licence. And licensees who are associated with an existing regional supplier are not allowed to offer water supply in their affiliated company’s region to avoid data sharing and potentially unfair advantage over independent licensees.
To establish the competition framework, Ofwat has limited the number of customers eligible to utilize the services of the new licensees. These non-domestic customers have water consumption equal to or greater than 50 megalitres – approximately 13,208,600 U.S. gallons – per year at a single site. Currently, there are about 2,200 companies throughout England and Wales which are eligible to be approached by the new licensees.
One of the first companies to be granted a combined license in 2005 was Severn Trent Select, a unit of Severn Trent Services. In addition to water supply, the company provides design, construction, operation and maintenance services from the point of supply to the customer’s site to the disposal of effluent. Severn Trent Select also provides value-added services such as consultancy on environmental policies and develops efficiency strategies, provides risk assessments, locates and fixes leaks and lays new mains.
Over the past year, customer and prospective customers of new licensees have been encouraged to provide feedback on the kinds of services they want and how they want those services delivered. As this area of the water and wastewater evolves and more and more companies experience the benefits of competition, companies such as Severn Trent Select will have the opportunity to demonstrate the value they can bring to the market.
For more information, e-mail info@severntrentservices.com.
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