Annex B
TERMS OF REFERENCE FOR THE CAVE REVIEW OF
COMPETITION AND INNOVATION IN WATER AND SEWERAGE MARKETS
1. The Secretary of State for EFRA and the
Chancellor have commissioned an independent review of competition
in the water and sewerage sector. This fulfils a commitment to
bring forward a review of the eligibility threshold and a wider
review of the competition framework and complements ongoing work
by the economic regulator, Ofwat.
2. The review will have the principle goals of
increasing efficiency of water use and delivering benefits to
both business and household customers. The review will consider
the scope to deliver benefits and drive innovation through developing
competition and contestability in all aspects of the supply chain
in the water and sewerage sector and will recommend changes to
the legislative and regulatory frameworks needed to deliver those
benefits.
3. The Review will include an assessment
of the costs, benefits, risks and feasibility of extending competition
and contestability in water and sewerage services by looking at
potential models in liberalised markets, best practice in other
industries and demand from stakeholders. This will include consideration
of the impact of proposed changes on:
— availability and sustainability of
water supplies;
— encouraging water efficiency;
— innovation, research and development;
— investment in infrastructure; and
— reducing regulatory burdens.
4. It is very important to Government that
the interests of household customers are protected in the round,
and vulnerable customers in particular. The review will consider
changes that can be made to the current regime through secondary
legislation as well as changes that would require primary legislation.
It will include consideration of:
— the eligibility thresholds;
— statutory water supply licensing
provisions, including the cost principle and policy on access
pricing generally;
— extending access to sewerage services;
— Ofwat's powers in relation to competition;
— statutory inset appointment provisions;
— relevant issues surrounding the abstraction
of water; and
— any other specific changes that would
deliver benefits and drive innovation through further competition
and contestability in water and sewerage services in England and
Wales.
5. Ofwat, the industry regulator, holds
a formal advisory role for Government. Ofwat is carrying out its
own work stream considering how best to further competition in
the water and sewerage sector. This review for Government will
draw on Ofwat's work and will advise ministers on the outcome
of Ofwat's review.[5]
6. The Review will report to the Secretary
of State for EFRA the Chancellor and Welsh ministers.
DEFRA
February 2009
5 See: http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/AttachmentsByTitle/marketcomp_waterind_part1.pdf/$FILE/
marketcomp_waterind_part1.pdf Back
| 
