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The transfer of privately owned supply pipes to water companies would add to customer bills, according to regulator Ofwat.
In response to a government consultation on the proposals, Ofwat said the move would place a cost of more than £4 on customer bills, in return for only £2 of benefit.
The Department for Environment, Food and Rural Affairs (Defra) and the Welsh government say the proposals could reduce leakage, protect water quality and help to ensure that water supplies remain resilient and sustainable for the future.
However, the regulator said the evidence, which is limited to a single UK Water Industry Research (UKWIR) report, was insufficient to justify the transfer of ownership.
According to Ofwat, it does not provide any examination of the existing market for supply pipe maintenance and repair, including relevant insurance products, and how well or poorly this is currently protecting customer’s interests.
In addition, Ofwat is concerned that it does not examine any alternative options to addressing these issues except transferring ownership to incumbent monopoly companies.
Ofwat said: “Transferring ownership of supply pipes may not be necessary to achieve the proposed benefits. Companies can repair customers’ supply pipes now with their consent and they have strong incentives to do so including to achieve their leakage reduction targets and wider cost savings such as reduced pumping costs and dosing to meet water quality standards.”
Ofwat added that currently, companies were able to keep a proportion of the savings gained from repairing customers’ supply pipes and that most companies already offered either free or subsidised repair schemes.
The regulator said: “Fundamentally we believe that before a transfer of ownership is considered that will increase customer bills a market study should be undertaken into the existing market so as to identify a range of potential solutions.”
These it said, could include information campaigns to increase customer awareness of their ownership over supply pipes or “some form of Government intervention to upgrade these assets itself”.
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