Competition needed to spark NAVs growth

Independent water connection companies are falling behind energy counterparts, which has led to calls for government to reassess competition rules in water and wastewater.

The Independent Networks Association (INA) urged government and regulators to streamline the licensing approach for new water companies to avoid separate applications on a site-by-site basis.

Nicola Pitts, chief executive of the INA, said this would expediate housing delivery and make the market more attractive for new participants.

In a report exploring benefits of competition in the new appointments and variations (NAV) sector, the INA stated there needs to be greater transparency and consistency from incumbent water companies on pricing.

Despite a surge in independent suppliers since 2017, when there were just 2% of independents compared to 20% today, independent water companies lag behind the energy sector, which is made up of 80% independent firms.

The trade organisation represents water, electricity and gas companies that are independent from the incumbent suppliers

Pitts told Utility Week that working across multiple utilities gave the INA insight into differences between energy and water, with independent water companies lagging far behind energy firms for new connections.

The organisation wants to see NAVs national licenses for water applications on a par with the process energy and gas connections follow. This, the organisation argued, would make the market more attractive to independent NAV suppliers.

Pitts described the current application process for licencing as unsustainable. Housing developments require site-by-site licensing, regardless of size, with input from Ofwat, the Environment Agency and Drinking Water Inspectorate.

The INA is working with Ofwat and incumbent water providers to remove barriers and reform policy to encourage competition in the market for construction and operation of infrastructure for developments.

Combining utilities, from a developer perspective, could simplify add supply and waste infrastructure on new builds in one step rather than coordinating with multiple suppliers, the report argued.

As of 2021, NAVs sites covered c.50,000 properties, 7,000 more than the previous year when NAVs served 42,000 residential properties and 1,000 business properties, equating to 100,000 individuals.

Over recent years Ofwat has set guidelines for how incumbents should charge NAVs for bulk supply. It introduced a framework to assess developer customers satisfaction.