by Megan Darby
The government has strongly hinted in a policy statement issued on Monday that it is concerned about Ofwat’s Section 13 water company licence change plans.
Although it does not explicitly refer to Section 13, the document published by the Department for Environment, Food and Rural Affairs emphasises the importance of keeping the sector attractive to investors. That chimes with the industry’s warnings that Ofwat’s proposals could undermine confidence.
The statement said Ofwat should seek to avoid regulatory uncertainty “wherever possible” and “take appropriate account of investor views” on the impact of reform.
“Reform should be well signalled, based on solid evidence and introduced at a measured pace,” it added. “This should not anticipate or pre-empt policy decisions that are properly for government to take.”
Water minister Richard Benyon said of the statement: “Importantly, it reaffirms our strong commitment that the water industry should continue to attract the vital investment that will be needed for the future.”
Rob Wesley, head of policy at industry body Water UK, said the document sent an “unmistakeable signal”. Ofwat would have a “significant decision” to make on whether to refer the matter to the Competition Commission if companies rejected the plans.
As Utility Week went to press, no-one at Ofwat was available to say whether the policy statement affected its position that there was “no alternative” to a Competition Commission referral.
This article first appeared in Utility Week’s print edition of 16th November 2012.
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