Harnessing markets
The water and waste water sectors are facing many challenges in the future including population growth and climate change which are likely to increase water scarcity although their impact is uncertain. Markets provide a flexible process better suited to conditions of uncertainty than regulation in many contexts. We are considering where and how markets could be introduced to deliver better services to water and waste water customers than the existing regulatory arrangements.
Removing barriers
The project aims to remove any unnecessary barriers to the introduction of regulated markets. Different activities needed to supply water and wastewater services have different needs for regulation, and different scope for the use of regulated markets. This project will include the following strands.
- Developing the existing market framework for retail services (such as billing and meter reading) for non-household customers. This would bring water and into line with the way businesses are able to manage, for example, their energy supply and other needs.
- Developing measures to promote regulated markets to support our Future Price Limits project.
- Reviewing which other areas of water and sewerage supply would benefit from introducing market arrangements, and which are more suited to a regulated monopoly structure.
- Working with the Environment Agency, the Department for the Environment, Food and Rural Affairs (Defra) and the Welsh Government to help remove barriers to the trading of abstraction rights as part of reforms to help restore sustainable levels of abstraction.
Related reviews
The markets project is building on the recommendations made in the independent Cave Review of competition in the water and sewerage industries. We are expecting the Government to say how it will take forward the Cave Review recommendations in its Water White Paper.
Further information
Our publications on the market reform project are listed below. If you would like to speak to someone about this project, please contact Tom Kiedrowski, tom.kiedrowski@ofwat.gsi.gov.uk or Jon Ashley, jon.ashley@ofwat.gsi.gov.uk.
Market Reform Finance Modelling Group – meeting held 29 November 2011
13/Jan/2012 (PDF - 102 KBytes)Ofwat’s review of the evidence base for retail competition and separation
8/Dec/2011 (PDF - 469 KBytes)Market Reform Finance Modelling Group – meeting held 27 September 2011
2/Nov/2011 (PDF - 129 KBytes)Ofwat publishes independent reports on the role of the system operator
16/Mar/2011 (HTML - 6 KBytes)Valuing water – how upstream markets could deliver for consumers and the environment
27/Jul/2010 (HTML - 6 KBytes)Ofwat's response to the consultation on the Cave review of competition and innovation in water markets
17/Dec/2009 (PDF - 273 KBytes)WWF-UK and Ofwat: joint statement on pathways to sustainable abstraction
17/Sep/2009 (PDF - 471 KBytes)Advice from Ofwat to the UK Government on the question of a threshold for legal separation of appointed companies’ retail businesses in the water and sewerage sectors
16/Jul/2009 (PDF - 150 KBytes)Ofwat’s response to the Cave review on competition and innovation in the water markets
25/Jun/2009 (PDF - 132 KBytes)Accounting separation - consultation on June return reporting requirements 2009-10
13/Mar/2009 (PDF - 240 KBytes)Introduction to competition proposals and financing issues: a report for Ofwat
25/Feb/2009 (PDF - 27 KBytes)Competition proposals and financing issues: a report for Ofwat
Report commissioned by Ofwat from Richard Nourse
25/Feb/2009 (PDF - 151 KBytes)