Environment secretary Caroline Spelman and Welsh ministers have commissioned a wide-ranging review of the water industry regulator Ofwat and asked interested parties to submit evidence.
Key environmental issues that could surface are the regulator’s relative prioritisation of sustainability issues, including investment to increase renewable electricity generation, water quality benefits from catchment improvements and cutting leaks through mains replacement.
Launching the review on 26 August, Ms Spelman said: “Ofwat has been successful in holding down household bills while water companies invest in their infrastructure.
“But we need to make sure the regulator is in good shape to help the industry prepare for a changing climate and a growing population, at the same time as keeping bills affordable.
“It’s important to reassure water companies and bill payers that Ofwat provides good value for money by carrying out its duties without unnecessary red tape.”
The review will be headed by David Gray, an non-executive director of the Civil Aviation Authority and former managing director of Ofgem It will be completed in early 2011 and feed into the government’s plans for a water white paper.
Ofwat is now over 20 years old. It was originally envisaged as a financial regulator, mimicking the role of market competition in boosting the efficiency of a monopoly industry. However, its role has expanded to include social, sustainability and environmental issues.
The review is also to include the Consumer Council for Water, which had its origins within Ofwat as a representative body for water customers.
The review will consider Ofwat’s increasing remit and its boundaries with government, government guidance to Ofwat , the regulator’s effectiveness and whether it delivers value for money, its contribution to sustainable development and whether it can learn lessons from other economic regulators.
The environment department (DEFRA) has asked for evidence from customers, water companies and investors to be submitted by 29 October.