The government has said it wants to stimulate competition within the water sector through streamlined regulation as well as delegating some of Ofwat’s powers around the non-domestic market.
The Department for Business and Trade proposes expanding competition in regional water and wastewater monopolies via the new appointments and variations (NAV) framework and by delegating Ofwat’s responsibilities for code changes.
The framework is the route for NAVs to replace the incumbent supplier to provide water and wastewater services to new connections. They are able to compete with incumbents across England and Wales without geographic restrictions.
Under the proposals outlined in a consultation, the application process for NAVs would be streamlined from a 28-day statutory consultation ahead of granting a licence for a NAV to operate in a particular area regardless of the size.
Nicola Pitts, executive director at the Independent Networks Association, told Utility Week the organisation has been calling for the whole process, which can take 85 working days in total, to be shortened.
She said the association’s members would like to get to the stage that a water company can be approved for a national NAV licence. “This is just a case of removing the burdens on either side. There are other ways to get the comfort and clarity the regulator would want around how to treat customers and reassurances.”
The number of NAV applications approved by Ofwat has grown from 231 in 2021, to 342 so far in 2023, Pitts said. “With NAVs growing, this is something that really needs to change. Ofwat feels the burden of the processes as well as the applicant, so we work with them to speed it up.”
Although the scale of the NAV market has grown in recent years from 2% of all new premises in 2017, to 20% in 2021 it remains substantially lower than energy where 80% of new premises are served by independent network companies.
New appointees have the same obligations as regional incumbent suppliers and where energy and telecom infrastructure are to be simultaneously provided, can cut red tape for developers.
The consultation separately moots delegating powers to make changes to the non-household retail market code away from Ofwat. Currently, code changes are made by the regulator. However the document suggets letting Ofwat delegate approval of code changes to a different body for non-substantive, uncontentious changes.
Elsewhere, the consultation considers ways to widen the use of direct procurement for customers (DPC) and nationally significant infrastructure projects (NSIPs) to make processes simpler and encourage companies to utilise alternative financing for large scale schemes.
The Drinking Water Inspectorate may also be granted extra powers to take action against companies other than water providers. Currently its jurisdiction is with regulated water companies, however the Water Industry Act may be amended to give the DWI investigation and enforcement powers to take action directly against an infrastructure provider of large-scale water supply projects.
The consultation runs to 17 January on these issues as well as proposals to bring the price control appeal process for water in line with energy and the suggestion of a wider review of regulators’ duties.