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UTILITY WEEK | 4TH - 10TH DECEMBER 2015 | 3 Leader Ellen Bennett This week 4 | Seven days 6 | Interview Nick Ellins, chief executive, The Energy & Utility Skills Group 11 Policy & Regulation 11 | News Firms must team up for water resilience 12 | Climate change Utility Week takes a detailed look at what's at stake at the climate change talks in Paris 16 | Analysis The winners and the losers in the governments' Autumn Statement 19 Finance & Investment 19 | News RWE follows Eon's lead and splits its business 20 Operations & Assets 20 | High viz Snow storms hit Scotland and the north of England 21 | Pipe up Nick Ellins 22 | Game changer Why Cumulus turned to a 200-year-old battery design for grid-scale storage 26 Customers 26 | News Total cost of unpaid water bills tops £2bn 27 | Analysis Domestic water may be opened to competition as early as 2020 29 Markets & Trading 29 | News Rising bills prompt competition fears 30 Community 31 | Disconnector It's the end of the world as we know it It could have been worse. Rumour has it the Treasury initially wanted to announce this week that the water market would open to competition for domestic customers in 2017, at the same time as business customers. Water companies were saved that, at least, with Monday's shock announcement being that domestic competition is likely by the end of this Parliament in 2020. It was the inevitable next step – the government's enthusiasm for opening the non-household market has always signalled more fundamental change to come. But companies were confidently expecting to be allowed to implement non-household competition first. They thought another Parliament, and another price review, would pass before domestic competition led the agenda. Chancellor George Osborne has blown that confidence out of the water. The motivation for swi change isn't clear – there isn't the same pressure for reform from domestic customers as there was from business customers. But it seems the newly-elected single party government is keen to implement its free market ideology, and water has been tacked on with a number of other industries. Ofwat has been handed the task of carrying out a cost-benefit analysis, to be completed by next summer. While the industry insists this is a genuine exercise, the wording from the Treasury makes it seem a foregone conclusion. Certainly, the regulator's enthusiasm for competition is well documented, and it would take a brave body to defy Number 11 – not to mention Number 10, which also had a hand in this week's announcement. So what does domestic competition mean for the 18 water compa- nies that make up today's market? Nothing less than the end of life as they know it. While the energy industry isn't a direct analogy, it's likely that water wholesale businesses will become something akin to energy networks: they have and will keep a natural monopoly. Maintaining investor confidence over the next few years and beyond will be top of their list of concerns. Following vertical disaggregation, it's uncertain how many of today's water companies will be a force in the retail market. There are huge questions over how to develop a thriving market with viable margins while protecting all customers, including those who are hard to serve, which must now be answered quickly. What the announcement means for customers isn't yet clear. Certainly, consumers' lacklustre response to the option of switch- ing energy supplier suggests that the opportunity to change water company isn't likely to be earth shattering. No doubt multi-utility bundling and white labelling will emerge, which may attract some customers. There will be initial costs to market opening, with sav- ings likely only further down the line. Proponents of competition argue that innovation and improved customer service will result – and perhaps they will, if water can learn from the mistakes of the energy industry. And what of the water companies? For some, this week's announcement is terrible news. For others, it's an opportunity, albeit one at risk of being rushed. The companies are unlikely to insist on a party line this time round, as they did to the industry's detriment with business retail. This seems an implicit acknowledgement that the old days of the one-size-fits-all vertically integrated water com- pany are over forever. Welcome to the Brave New World of water. Ellen Bennett, Editor GAS 11 | News Go-ahead for Lynemouth biomass plant WATER 19 | News Marginal rise in earnings at SWW 19 | News Price controls fail to dent Severn Trent's profits 26 | News UU expands Scottish retail market share 26| News Budget for market opening falls by 8% 27| Analysis Domestic water competition could be rushed in 29| News Trading will bolster water supply ELECTRICITY 16 | News South Humber Bank to return to service 22 | Game changer Grid-scale storage using vintage technology ENERGY 11 | News National Grid scoops a third of NIC funds 11 | News CCC urges 57% carbon emission cuts 11 | Political agenda Scrapping CCS is not bad news for everyone 12 | Analysis What's at stake at the climate change talks in Paris? 26 | News Protection scheme for heat customers Knowledge worth Keeping Visit the DownloaDs section of Utility week's website http://www.utilityweek.co.uk/ downloads