CONSUMER COUNCIL FOR
WATER News Release (CCWater 21/07) issued by The Government News
Network on 4 July 2007
A survey by the
Consumer Council for Water and Ofwat detailing business
customers' views of competition in the water industry has
revealed that the water competition regime is not providing
businesses with a workable framework in which they can change
their water supplier.
Despite interest from business customers, more than 18 months
after the launch of competition, none has actually switched their
water supplier - and the results of the survey indicate this is
likely to remain the case, at least in the short term.
Responding to the business community's frustrations with the
competition regime, the aim of the survey was to help the Consumer
Council for Water to gain a greater understanding of business
customer views and expectations regarding competition. The
research will also be taken in to account by Ofwat in its ongoing
review of competition. The next step will be a wider consultation
this month.
The findings reveal a clear indication that the existing
competition regime is failing to meet the needs of the businesses
it was designed to serve, with most dissatisfaction and interest
in competition revolving around the question of price.
The introduction of competition into the water industry in
December 2005 gave more options to large business users (around
2,200 businesses likely to buy more than 50 megalitres of water
per year) to change supplier in order to reduce cost and negotiate
tailored service levels.
Most business customers (84%) are supportive of competition in
principle, but only 30% are confident that the current regime will
deliver benefits to customers. Nearly two thirds of customers were
likely to switch in the right circumstances, but about the same
number think the competition regime for the water industry
compares unfavourably with other utilities.
The most important factor in a decision to change water supplier
appears to be the ability of the business customer to achieve a
lower price for their water supply, with 81% indicating this would
need to be a saving of up to 10% with a subset of those (39%)
saying up to 5%.
The survey revealed that only 28% were satisfied or very
satisfied with the level of their current bill, so it is no
surprise that 93% would switch if offered lower bills. Around half
(49%) would switch if a better service was offered by a new
supplier, while 43% wanted a guaranteed switchback.
Businesses saw 'barriers' in the competition market as
relating to uncertainty about the way the market works and the
inability of new entrants to secure a low cost wholesale price.
The survey also found that those companies with multiple sites
appeared to be more engaged or aware of the issue of competition -
understandable given the potential they have to make savings. The
report concluded that consideration should therefore be given to
expanding competition eligibility to include multiple sites that
meet the minimum threshold criteria.
Sir James Perowne, Deputy Chair of the Consumer Council for
Water, said: "Dealing with the issues raised in this
research will be a matter for government, sector regulators, and
the Consumer Council for Water, working with the water industry.
"There are a number of barriers which are stopping the new
regime from working. These need fixing. The market also needs to
be bigger with more customers having a choice.
"We need to be clear where the water industry is going in
terms of competition and over what time scale. If some customers
will not be allowed a choice, it is important that they are not
disadvantaged by the extension of the regime."
The full report is available on the Consumer Council for Water
website at http://www.ccwater.org.uk
End
Notes for editors
1. The Consumer Council for Water represents consumers in England
and Wales. Consumers can contact Consumer Council for Water on a
national number, 0845 039 2837.
2. Consumer Council for Water is the statutory water consumer
body, and operates as a non-departmental public body reporting to
the Department of Environment, Food and Rural Affairs and the
Welsh Assembly Government. It has a committee for Wales, and at
local level it is supported by nine regional committees in England.
3. The Consumer Council for Water represents consumers in England
and Wales. Consumers can contact Consumer Council for Water on a
national number, 0845 039 2837.
4. Consumer Council for Water is the statutory water consumer
body, and operates as a non-departmental public body reporting to
the Department of Environment, Food and Rural Affairs and the
Welsh Assembly Government. It has a committee for Wales, and at
local level it is supported by nine regional committees in England.
Public enquiries to the Consumer Council for Water's
national number, 0845 039 2837 - or email at enquiries@ccwater.org.uk
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