Cholderton and District Water – the UK’s smallest water wholesale company – has applied to Ofwat to become a private company after the retail market opens next week.
The company, which supplies around 2,000 people in an area of around 21 square kilometres, said the reason for its request to privatise was that, as a very small company, “it may not be able to meet the demands, costs and obligations of the regulatory framework in the future”.
All areas of England and Wales need to be covered by a statutory water undertaker and, for Cholderton to become a private water supplier, its licence would need to be terminated and another company would need to cover its area.
Wessex Water has made an application to Ofwat to vary its licence to cover the area served by Cholderton. Wessex would not take over Cholderton’s water supply network and, therefore, Cholderton would continue to supply its current customers through its current network as a private water supplier.
The proposal is made with the support of the boards of both Wessex Water and Cholderton.
Ofwat said in a consultation document: “The proposal to become a private water supplier has consequences for current and future customers. Customers would lose their statutory protections such as the limits on prices, the ban on disconnections and the guaranteed standards scheme.”
The regulator said Cholderton proposes to adopt of most of the current protections if it became a private water supplier, but Ofwat could not enforce these because it has no powers to regulate private water suppliers.
It has invited stakeholders, especially Cholderton customers, to comment on its proposed variation by no later than 28 April.
Twenty per cent of the land area covered by Cholderton and District’s distribution network is occupied by the Cholderton Estate, which has close links to the water firm.