Some parts of the water industry eventually lifted their ban on hosepipe use this week, after weeks of forecast and predictable downpours. (See this blog about a very wet drought on May 24th “Water,water, everywhere…”).
On cue, I met representatives of the industry and the regulators this week to hear about the opportunities for more competition. We heard how more extensive competition for the supply of water to business in Scotland has had favourable results. Costs have been reduced by £140 m overall, and prices are down a little. Service quality and flexibility has improved substantially. Those industries that want reliable supply now have more assurances that they will get the volumes they want when they want them. Those that need different quality standards or different additive patterns might now get them. Above all, industry representatives said how different the approach of the water businesses now was. It used to be take it or it leave, and prove the water industry wrong if you challenge its bills or its supply. Now there is a more normal wish by the Scottish water industry to help the customer and respond to customer needs.
In England the government says it wishes to increase competition for business customers, but is still adamant that the poor old long suffering retail customer has to put up with a monopoly. Introducing lop sided competition means the regulator has to watch like a hawk to make sure the industry does not shift costs from the competitive side to the monopoly side in an effort to be more competitive where they need to be. It also means retail customers are cut off from the advantages of keener prices and more flexible service. Does anyone think a competitive business would keep customers on a hosepipe ban for so long during floods as the monopolies did? Does anyone think a competitive industry would charge as much, and insist on just one standard of water for all customers? Would a competitive industry use so much high quality drinking water to clean cars and flush down the drain?
There are three things I do not like about some monopoly water companies. The first is the refusal to supply the amount of water customers want when they want it. A hosepipe ban in a period of high rainfall is no problem for gardeners, but it does stop you keeping cars, patios and other outdoor items clean, and prevents watering new plants if you happen to put them in when it is not raining.
The second is the high and rising price. The regulators seem to be in cahoots with the industry, accepting the case for extra investment – which is needed – and then accepting it has to be funded by price rises rather than by more efficiency, and better use of assets. Competition would cut prices and boost efficiency.
The third is the endless hectoring. The monopolists lecture customers, telling us we use too much, and telling us we need to cut back on use. They do not know how much many of us use, because we do not have individual meters. For all they know I might be very frugal with my water use, yet I still get the lecture. Water is the ultimate renewable resource. There is a water cycle.. We are not arguing about depleting some precious and scarce asset. We are talking about how much we use as the water passes from clouds to sea.
The government should go the whole hog. Introduce competition for all. If it is, as some say, a natural monopoly, it will do no harm and make no change. If, as is the case, it is a potentially competitive induistry, we should see more supply and lower prices.