The latest wet drought has highlighted the imperfections of our water industry, with its heavy regulations and government protected regional near monopolies. It takes some kind of genius to be short of water in an island famed for its heavy rainfall in many parts. It shows a lack of self awareness to be enforcing drought orders in the middle of one of the wettest springs on record.
I have long put the case for water competition. Why can’t we have a choice of water provider? Why do we have plenty of bread, but run out of water? Isn’t the main difference that competing farms grow the grain and competing bakeries bake the bread, whilst regional monopolies decide rationing is easier than supplying enough to meet demand for water?
The good news is the Coalition government has decided to introduce competition for all water supply to business. It is keen to allow water companies to buy and sell water across water company boundaries.
At present little of this happens. Under the complex regulatory system in place companies feel they are better rewarded for putting in new water gathering capacity of their own, than buying water from another part of the country where it is more plentiful and cheaper. They can offset the capital expense against the profits under the formula used for price calculations.
The government might also considering a Green Deal type scheme for water customers to invest in water gathering and supply facilities at their own home so they could supply some or all of their own water for grey water purposes. Customers taking such an option would be lent the money to put in the equipment, and be put onto water meters for their company supply which would cut their bills considerably as they used their own water for gardens, car washing and other low grade water activities. They would repay the loan for the water equipment over time, probably with their bills and loan repayments being lower than the old bills with full supply from the water company.