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Utilities - Water Group

Challenges facing the UK water industry

The Cave Review. This review, commissioned by the government and undertaken by Professor Martin Cave, was published in April 2009 and looked at competition and innovation in the water industry. The review made a number of recommendations including increasing competition upstream, implementing retail separation, giving non-household customers the option to choose their water supplier and creating an industry research and development body.  If eventually implemented, a number of these recommendations would be likely to have a significant impact on competition in the water industry.

Climate Change. The effect of climate change is driving the renewable power agenda and the need for energy efficiency within the water industry; operation of UK water infrastructure involves major energy usage.  The water industry also faces other challenges arising from climate change in relation to security of supply and an increase in water demand should the longer, hotter, drier summers that are predicted occur.

Economic Conditions. The current economic climate means there is downward pressure on charges the water companies can make for their products and services and yet their obligations for capital investment remain onerous. This has been highlighted further recently in Ofwat's PR09 determination on the prices water companies can charge their customers.

Private drains and sewers. The Government is currently considering implementing legislation which would transfer responsibility from householders to water companies in respect of the maintenance and repair of private sewers and lateral drains that drain to the publicly adopted sewerage network. This will have a significant impact on water companies who will find themselves being required to take over the maintenance requirements for those transferred drains and sewers, the location and condition of which may to varying degrees be uncertain..