Ofwat today published proposals to change the water supply licensing (WSL) regime to bring the benefits of effective market competition in the water and sewerage industry to more customers.

Effective competition across the water sector in England and Wales will lead to greater benefits for consumers in the future, driving dynamic efficiency and spurring innovation in a way that regulation generally cannot.

Keith Mason, Director of Regulatory Finance and Competition, said: "Competition in other utility sectors has lead to lower bills and improved service, enabling the withdrawal of regulation where markets become effectively competitive."

The main changes proposed in today's paper are to increase the number of non-household customers eligible to benefit from competition and amend the access pricing regime, by asking the Government to remove the Costs Principle from legislation.

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Ofwat proposes that, initially, the current 2,200 customers eligible to change water supplier should be increased to include around 27,000 non-households, rising to all 1.2 million non-households in the near future. Greater flexibility in how access prices should be set is also proposed, which requires a change to legislation.

Mr Mason added: "We welcome the Government's commitment to a review of competition and we would like to see the proposals we are making in this paper and the forthcoming paper in spring 2008 taken on board in that review.

"Government can expand the market and amend the access pricing regime, both of which will improve the prospects for the development of greater competition in this sector."

A consultation launched in July called for debate on a wide range of options to help promote the development of a competitive water and waste water sector.

Following from that consultation, today's proposals represent the conclusions of Part One of Ofwat's competition review, focusing on making the WSL regime more effective and developing greater transparency in the market by implementing accounting separation by appointed water companies.

Part Two of the competition review will follow in spring 2008, and will consult on proposals for wider changes to the industry.

(GK/SP)