Trickle of competition set to become a flood in the water market

Posted: Friday 20th April 2018

GTC, the UK's largest independent utility network provider to the new-build market, has hailed the imminent arrival of genuine competition in the provision of new water connections for housing developments in England and Wales. From April 2018, measures introduced by Ofwat will sweep away barriers to competition and, for the first time, give housebuilders and developers a real choice of providers for new water and wastewater connections. This opening up of the water market, described by Ofwat as "a significant change from the past", is expected to bring developers of all sizes significant benefits including lower prices, better customer service and innovative supply solutions.

Following an investigation into how the water market was operating, Ofwat is introducing changes that will make it easier for developers and competing water companies to establish what an incumbent water company will charge to connect a new development to their existing water network. The charges will also be fairer, with new connections not paying for pre-existing network issues. In addition, Ofwat has undertaken to streamline the lengthy licensing process required to appoint alternative network providers.

Competing water companies, referred to as NAVs - 'New Appointment and Variation' - are licensed by Ofwat on a per site basis. Under the previous regulatory arrangements, it was only financially viable for NAVs to provide networks on large developments. GTC, for example, is already responsible for more than 8,000 live water and wastewater new connections to a number of major developments across the UK including King's Cross and Greenwich Millennium Village in London, Priors Hall in Corby and Berryfields in Aylesbury. GTC is also contracted to build out thousands more connections on sites from Newcastle to Weston-super-Mare. With these market changes, however, hundreds of new NAV licences are now expected for developments of all sizes.

Until now, in England and Wales, the default option for housebuilders was simply to obtain water and wastewater connections from the local, incumbent water company either directly or via self-lay utility companies installing on their behalf. This was a very different market environment from the already liberalised electricity and gas markets where the majority of new connections are now carried out by independent network providers such as GTC.

John Marsh, GTC's Water Director, is delighted that the water market is following the lead provided by gas and electricity. "This is a watershed moment. A real game-changer. We have been held back from offering the whole housebuilding sector the choice to benefit from our different approach to network provision. As the trusted utility provider to many of the UK's top housebuilders over many years, we are looking forward to being able to support many more of them with the full range of utility network connections. Adopting a truly multi-utility approach, sourcing all utilities from a single network provider, is now a realistic option for all housebuilders and developers."

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