Domestic water customers ‘not ready’ for competition

Customers are not ready for the extension of supplier choice to the household market, the chief executive of Castle Water has told MPs.

Giving evidence yesterday (3 July) to the House of Commons’ environment, food and rural affairs select committee, which is conducting an inquiry into the regulation of the water industry, John Reynolds said the first year of the non-domestic market liberalisation had been “hard work”.

He said there has been a “big move” by public sector bodies, like councils and NHS trusts, to seek out new suppliers.

But there had not been “enough buy in” from SMEs due to a lack of support and information that would embolden firms to switch providers. Reynolds said: “The central information to support the market isn’t very good and even where we offer discounts that can be 10 per cent customers aren’t opting for it.”

When quizzed on whether the domestic market was ready for a greater choice of suppliers, he said “unfortunately no” because the potential savings on offer were too low to make switching worthwhile.

Instead of introducing switching to the household market, Reynolds said policy makers would be better off concentrating on enhancing the customer rights framework which he said is not up to date. “The approach we have is not fit for purpose to protect domestic customers where things go wrong.”

Steve Robertson, chief executive of Thames Water, admitted the company had learnt lessons from its response to the thaw that followed the recent Beast from the East, when thousands of its customers were left without water due to burst pipes.

He said the utility should rely less on social media to communicate with customers and centralised points, like supermarket car parks to distribute water bottles to customers.

He said: “It was quite an unparalleled event in terms of impact on customers but with climate change, these kinds of incidents are going to be more likely.”

And he said the recent proposal by the National Infrastructure Commission to transfer water between regions was not a “silver bullet” for relieving droughts.

Pointing out that droughts often hit different parts of the country simultaneously, he said: “We have to be careful about assuming that we could transfer water. It’s not like electricity or telecoms, it’s heavy and expensive to pump it up and down hills.

“We need to take it seriously and it’s potentially part of an overall solution but it’s not a silver bullet.”

Adding that mixing different sources of water presents environmental challenges, he said transfers are part of the picture alongside tackling leaks, limiting consumption and building more dams in the south of England.