Household competition risks being a damp squib, warns CCWater

The Consumer Council for Water (CCWater) has warned today that customers will end up disappointed if household water competition goes ahead based on an overly optimistic review by Ofwat.

The water watchdog has written to the industry regulator challenging some of the more positive assumptions it has made in its assessment of the costs and benefits of giving customers a choice of retail water supplier.

CCWater says the savings that would be available to customers – as little as £8 a year – would not be enough to persuade many people to switch supplier.

And it warns that many vulnerable customers are unlikely to take part in the market and could be hit in the pocket as a result.

Tony Smith, Chief Executive of the Consumer Council for Water, said:

If household competition is to be introduced we want to see a market in which customers are actively switching their supplier or renegotiating with their current supplier to get the best deal on price and service. We do not want to see the water sector experience the same problems that have affected the energy market.

We are not convinced by many of the more positive assumptions that Ofwat has made in its analysis. In particular, we question how many water customers would be interested in switching supplier for such a small amount of money.

We are also concerned that large numbers of customers, particularly the elderly and others living in vulnerable circumstances, may not participate actively in the market and that could cost them money.

In September Ofwat submitted its analysis of the costs and benefits of introducing household competition to the Government. This included four possible scenarios based on assumptions about what might happen, including the likely level of customer switching, retail savings and cost efficiencies.

Ofwat has not said which of its scenarios is the most plausible and CCWater believes it’s crucial the regulator makes clear to Government what it believes would be the most likely outcome.

The Government is now considering Ofwat’s report and will use it to make a decision on whether or not to open competition to household customers.

Non-household customers in England, including businesses, public sector organisations and charities, will be able to choose their retail supplier from April next year. Retail services include meter reading, billing and handling customer queries and complaints.

For more information or to arrange an interview call the CCWater media team on 0121 345 1005.