Developing Upstream Competition in the England and Wales Water Supply Industry: a New Approach

Jon Stern (CCRP, City University, London)

Abstract: This paper sets out the main reasons for introducing upstream competition in the water supply industry of England & Wales i.e. competition in the supply or raw and potable water to retailers and large users as well as some competition options. The paper discusses the possibilities for trade in abstraction rights and in bulk water. The paper covers the issues that would need to be resolved for such competition to be effective, including rents, stranded assets and the concentration of water rights ownership. A lot of attention is given to transitional issues drawing on the lessons learned in UK natural gas industry liberalization and EU energy sector reforms over the last 15 years. This paper is intended as a contribution to the discussion of introducing competition to the England and Wales water market in the light of the recent Cave Review. It concentrates on upstream competition i.e. competition in the supply of raw and potable water to retailers and large users . In particular, it tries to identify an approach that would enable substantive progress to be made over the next 5 years or so.

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