An article I penned a few years back talked about water scarcity and pollution being a constraint on Chinese economic gowth and even political stability. While nothing's happened since then to alter that view, one looming event in the west has made me think that China may not be alone in facing this threat, and that water stresses in any country can have implications way beyond its frontiers.
Market Insights on Water
So, as previous articles have suggested, there may be little interest among C&I customers in taking advantage of an open water market, and incumbent WaSCs have two years to implement an effective defence strategy. If it all turns out to be a non-event (except possibly in the South East), how might the Government and OFWAT react?
Affordability and cost recovery have long been the key issues around investment in water and waste water infrastructure in the developing world. However, a perfect storm of ageing networks, bad debt, climate change and rising demand are bringing them to the fore now on the agendas of Governments and utilities. "Social Tariffs" are moving away from being a detail of CSR policies or managing grumpy local MP's to being a major feature of utility balance sheet management.
The previous article suggested that the signs may not be propitious for a great deal of switching in the C&I market in England when it opens for competition in 2017. But should WaSC's therefore be complacent?
Probably the most noteworthy element of the otherwise underwhelming Water Act, which received Royal Assent earlier this year, is the advent of full competition in the English Commercial and Industrial retail market. From April 2017, the 5 megalitre threshold at which customers can apply for a competitive supply will be lifted in England. Our view, however, is that this will ultimately prove to be as disappointing as other parts of the Act...
A recent survey by the Consumer Council for Water (CCW) revealed that amongst the England and Wales water companies, just 35% of South West Water (SWW) customers felt they received value for money - the lowest score recorded. But perhaps the result tells us more about perceptions of value in the water industry than it does about the shortcomings of SWW.
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