by Megan Darby and Roger Milne
An Anglo-Scottish retail water market could be open for business in April 2017, the government announced this week as it published its long-awaited draft Water Bill.
That is the target date, assuming that three years will be needed from enacting the Bill to get the necessary framework in place.
It is subject to the agreement of a “high level” group charged with carrying out the reforms. It comprises representatives of Whitehall, the regulators, market participants and customers.
Officials from the Department for Environment, Food and Rural Affairs (Defra) said April 2017 was a “realistic” target given the expectation the legislation will get Royal Assent in 2014.
Environment secretary Caroline Spelman said the Bill would create a modern, customer-focused water industry. “By slashing red tape we will also stimulate a market for new water resources and incentivise more water recycling,” she said.
The draft Bill applies to England and Wales only, but Defra signalled that two elements would be extended to Scotland, subject to discussions with Holyrood.
The plan is that retailers will be allowed to apply for licences under the regimes on both sides of the border using their own regulator – either Ofwat or Wics.
Opinion was divided on the proposed timetable. Bill Easton, utilities director at Ernst & Young, said: “We suspect that business customers, who have already benefited from retail competition in Scotland, will wonder why they have to wait five years for largely similar arrangements to be delivered in England and possibly Wales.”
Easton acknowledged that hasty reform could scare investors, but he warned that a process perceived as too slow could also create uncertainty and risk.
Mark Powles, chief executive of Scottish retailer Business Stream, said: “Pragmatism and rigour are critical to ensure a fully-functioning market provides long-term benefits to customers.” However, he also said Business Stream was “keen to see the market opening as soon as possible”.
· The draft Bill does not answer critics’ calls for faster reform of the abstraction regime, a statutory target for water metering or stronger action to help householders afford their charges.
Water minister Richard Benyon said reforming the abstraction regime did not require further legislative impetus.
Welsh reform is the known unknown
Water is largely a devolved matter and Wales is notably absent from market reform proposals.
Cardiff has shown far less enthusiasm than Westminster for competition, and is more concerned about affordability.
A Water Strategy for Wales is due out for consultation this winter. Welsh environment minister John Griffiths said the document would “explore the appropriate role of market reform and regulatory mechanisms in driving improvement and innovation”.
This article first appeared in Utility Week’s print edition of 13 July 2012.
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