In a submission to the Competition and Markets Authority’s (CMA) inquiry into South West Water parent company Pennon’s takeover of Bournemouth Water, Charles Howeson said “this is an opportunity for the customers of both companies to benefit”.
He said that South West Water would learn from Bournemouth Water’s leading customer service standards and benefit from the integration of customer service operations.
“I would expect Pennon to deliver performance improvement for SWW, with no reduction for Bournemouth Water,” he wrote. “More is to be gained than lost from bringing the two companies together.”
Howeson also stated that the level of service across the industry would not fall as a result of the loss of a comparator company, unlike the Consumer Council for Water which claimed in its submission earlier this month the loss of Bournemouth Water as a comparator for the rest of the industry, could “weaken Ofwat’s efficiency challenge”.
Ofwat has also warned that without suitable remedies put in place, the takeover could hit the sector’s efficiency drive by up to £119 million by 2025.
He said that the detailed and focused business plans produced in PR14, and those developed under a similarly rigorous process for PR19, would result in companies “pushing themselves to achieve greater efficiency commitments and investment rationalisation” than under previous price controls.
He added that with the introduction of competition across the value chain “comparators may be less relevant as markets open up”.
In a separate submission to the CMA, the Drinking Water Inspectorate stated that it was “unlikely” the merger would increase the risk of a deterioration in the drinking water quality.
A final decision on the £100.3 million takeover of Bournemouth Water by Pennon is due in November.