TAP


SUPERMARKETS COULD SELL TAP WATER TO NATION'S HOMES

The water that flows through our taps is currently owned by a small group of companies

Supermarkets and other companies could be given the right to sell tap water to the nation's homes.

A Government review has cleared the way for a major shake-up in the sale of water first to businesses and, in future, to ordinary consumers.

The plan to open up Britain's water supply business to competition could drive down prices by a total of £600million over 30 years and improve customer services, it is claimed.

Just as companies were given the right to sell electricity and gas to home owners in the 1980s, now a similar system could operate with water.

Marks & Spencer and Sainsbury's currently sell gas and electricity to consumers. In future, this could be extended to water services.

The sale of water and sewerage services is more complicated than with gas and electricity because there is no national grid and the water that flows through our taps is owned by a small group of companies.

There are ten major water and sewerage firms supplying England and Wales, and a number of smaller water supply firms dotted around the UK.

New entrants to the market would have to buy water at a wholesale price from an existing supplier and then sell it direct to consumers.

If this new firm operated an efficient service with a very low profit margin, this water could be supplied to consumers at a cheaper price than they are currently paying.

It seems likely that such a scheme could only work if meters were installed in the homes of customers. Although it might be possible for new companies to supply water on the basis of a flat annual fee.

The policy has the support of the water regulator Ofwat and today won tacit backing from an industry review headed by Professor Martin Cave.

His review suggests that the water use threshold where companies are allowed to shop around for the best supplier should come down from 50 megalitres a year to five megalitres and then one.

One megalitre is equal to one million litres or roughly 220,000 gallons. It takes approximately 2.5 megalitres to fill an Olympic-size swimming pool.

The proposals will increase the number of firms able to choose their supplier in England and Wales from 2,200 to 162,000.

Extending competition further, to incorporate households, is expected to be supported in the Review's final report next year.

(Mail Online)