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U.K. Plans Water Law to Spur Competition, Investment

U.K. Minister David Cameron’s government published a draft bill to make it easier for water users in England to switch suppliers and save consumers as much as 2 billion pounds ($3.1 billion) over the next three decades.

The proposed rules give the water regulator Ofwat new powers over the industry and allow businesses and public agencies to change sewer and water suppliers. The government also plans to make it easier for companies to trade water in bulk, helping unlock supplies during a drought.

“For the first time all businesses and other organizations will be able to shop around for their water and sewerage suppliers,” U.K. Secretary of State for Environment Caroline Spelman said in an e-mailed statement. “By slashing red tape, we will also stimulate a market for new water resources and incentivize more water recycling.”

Britain’s water utilities are struggling to boost supply following an almost 2-year drought and patch leaks as demand increases. Southeast England suffered from water restrictions until yesterday even as Britain endured record rains that started in April. Kemble Water Holdings Ltd.’s Thames Water unit, which serves 8.8 million homes and businesses in London, had restrictions in place until lifting them June 14.

The government aims to bring in the new rules by April 2017, subject to a panel approving that timeline, Spelman’s department said in the statement.

Similar reforms to the industry in Scotland are already set to save public bodies 20 million pounds over the next three years, according to today’s statement. The economy may benefit by 2 billion pounds over 30 years should English reforms go ahead, it said.

‘Sourcing Water’

“Increased competition in the wholesale market will give water companies an incentive to come up with cheaper, more sustainable solutions to sourcing water,” Spelman’s department said.

Under the new rules, Ofwat will devise standard terms and conditions for companies wishing to enter the market, replacing a system where new entrants at present have to negotiate with as many as 21 water companies to gain access.

The government’s draft legislation outlined measures to expand environmental permitting regulations, extending them from pollution prevention toward flood defense and the ability of companies and individuals to draw water from lakes and rivers, known as “abstraction” rights.

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