Water shake-up to cut bills for householders

Householders will be able to choose between rival companies with competing tariffs to provide water to their homes under revolutionary plans put forward today.

In what would be the biggest shake-up of the water industry since privatisation 18 years ago, the regulator Ofwat said it envisages major reforms to break up the local monopolies and move the market closer to the domestic energy industry in which householders have the choice of up to six major competing providers.

Water bills have been soaring by around 25% in recent years as water companies spend money upgrading Victorian mains and making their water cleaner in line with European Union directives.

Competitive pricing is one reason for the shake-up, said Ofwat. "Competition will drive benefits such as greater responsiveness to customers' needs and downward pressure on costs," said Ofwat chief executive Regina Finn. "As markets develop we will continue to robustly challenge companies on price until competition is strong enough to protect consumers."

Ofwat launched a consultation paper today to see how fast it can bring in its reforms. The shake-up will also look at encouraging competition in the construction of new reservoirs and desalination plants.