Thursday 15 July 2010

Ofwat to carry out extensive review of pricing

Ofwat is to carry out a comprehensive review which will include looking at price limits, cross-company trading and how to get across to customers the 21st century value of water.

Speaking at Future Water 2010 in London this week, Ofwat chief executive Regina Finn said: "We believe in a vision of sustainable water", which she added meant sustainability on three fronts: environmentally, socially, and financially.

She said: "We need to understand the environmental value of water. We may be making the wrong choices: we may be making unsustainable choices."

She said Ofwat wanted to explore how companies could be encouraged to trade water, with those who have a surplus selling to those who do not have enough.

On price limits she said that the cost of water had to "drive sustainable behaviour", while on consumers she said that water companies needed "legitimacy with the customers" and needed to ensure that their views were heard. Customers' voices must be "embedded at the heart of the price process".

Finn's comments reflected those made recently by major players in the energy sector. Energy secretary Chris Huhne has stressed several times that honesty is needed with customers regarding energy costs, and has said that cheap energy is no longer sustainable.

And last week Tim Yeo, chairman of the Energy and Climate Change Select Committee, told the CRC Energy Efficiency Summit that "the era when economic expansion has been driven by cheap electricity is over".

With water often the poor relation in the energy family, there was a desire at Future Water to see it take its place in the future energy mix, and Finn stressed this: "At the moment, 25% of the average energy bill goes on heating water. That produces carbon emissions. There is clearly some scope for joined-up thinking on energy use."