Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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UTILITY WEEK | 28TH OCTOBER - 3RD NOVEMBER 2016 | 25 Customers something that will become a little bit more important for both retailers and wholesal- ers because of the charging mechanisms. It's very important that accurate data is collected on usage, and smart metering can – if it's implemented correctly – be a far more effi- cient way of that happening." This would mean the water market may have to undergo its own smart meter roll- out, the energy equivalent of which has been delayed by ten months and is costing tax payers almost £11 billion – not a very tempt- ing prospect. The last time competition in the domestic market was mooted, it was an idea that quickly fizzled out because it was not considered the most important thing that should be done in the industry. This time around things are likely to be different. Competition has been at the fore- front of the water sector's mind as it prepares for the opening of the non-household market in April 2017. Lessons can be taken from this, as well as from the existing market in Scot- land. Furthermore, retail competition exists, and has existed for some time, in other util- ity sectors. It is also worth considering that there is now a mush higher penetration of water metering across the UK. About 40 per cent of customers in England and Wales have a water meter, and the number is rising. So, taking all the available evidence into account, will government go for domes- tic water competition? It's a question that must be answered soon if companies are to include such a momentous change in their PR19 plans. " " "The prospects for competition may not be as vibrant as we expect, especially if retailers don't do the right thing." CRAIG LONIE, PARTNER, OXERA "I can see benefits from extending competition to household. At the same time, I can see reason for questioning it based on whether there was sufficient and valuable margin in the market." JOHN REYNOLDS, CHIEF EXECUTIVE, CASTLE WATER "Competition would change the way that we regulate the sector, there's no doubt about that." CATHRYN ROSS, CHIEF EXECUTIVE, OFWAT 20m Number of water customers in England and Wales. 82.5 Average SIM score for water sec- tor in 2015/16, up from 81.6. £2.9bn Maximum projected value of the market, according to Ofwat. £8 Saving per year per customer in this scenario. £1.4bn Minimum value of the market, according to Ofwat. £3 Cost per year per customer in this scenario. £52m Estimated value of retail cross-subsidies. THE BIG NUMBERS