The bill passed through its report stage debate in the House of Commons on Monday with no additional changes. Water minister Dan Rogerson reiterated the government’s stance on a retail exit clause and its decision not to force water firms to separate into retail and wholesale companies.
Rogerson said the government had not ruled out revisiting the issue of an exit clause in the future, but that it would risk “a bad outcome for household customers”.
“Were a company to exit and to leave household customers on their own—without the non-household element—customers would not only be left with a company that had limited incentives to focus on improving customer service, but would be at risk of having higher bills,” he said.
Rogerson argued that forced separation of retail and wholesale business would “reduce regulatory stability and risk increasing the cost of capital.”
However, Business Stream’s Mark Powles told Utility Week that separation should be required as it is in the Scottish retail market model, which has been operating since 2008.
According to Powles, separation would be “the cleanest and most efficient way to deliver a fair, transparent and successful market”.
“Separation would also benefit wholesalers as it would enable the water network companies to focus on delivery of their core business areas and drive transparency in costs between wholesale and retail business, allowing efficiencies to be identified,” he added.
This would have a knock-on effect for household customers who would also benefit from the efficiencies realised by their incumbent wholesaler.”
Initial market plans for the introduction of retail competition were published last week by the Open Water Programme.