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The Water Industry Market Report 2007
Key Note Publications Ltd, April 2007, Pages: 112
This Market Report on the UK water industry analyses the market in two sectors: water supply and sewerage services. In 2005/2006, the total turnover of the regulated water market (water supply and sewerage services) in England and Wales was £8.23bn, representing an increase of 9.4% on the previous year. The turnover of the industry is split almost equally between water supply and sewerage services.
The industry is served by two types of company: those providing water supply and sewerage services (WSCs) and those providing water-only services (WOCs). The WSCs are large companies and accounted for 91.6% of total industry turnover in England and Wales in 2005/2006.
The water industry in England and Wales is regulated by the Water Services Regulation Authority (which is still known as Ofwat) to ensure that appropriate standards and requirements are maintained and that water companies have the expertise to deliver them. Large annual investments are required to maintain the industry's infrastructure, but to prevent unacceptable price rises to consumers, Ofwat imposes price limits for each year over 5-year periods.
The UK water industry faces a number of significant challenges, not least of which are those relating to climatic conditions. There have been extended periods of low rainfall, with south east England having been badly affected in this respect and suffering from reduced water reserves. Water companies are engaged in reducing leakage from their networks to help conserve water. Weather conditions have also produced periods of intense rain with sudden flooding, which overloads the sewerage networks and causes damage to property. Major investments are required to maintain and improve the water industry in England and Wales, the annual figure for each of the next 5 years being over £3bn. Both the Department for Environment, Food and Rural Affairs (Defra) and the Environment Agency are engaged in consultations to address the whole question of water stress, taking into account factors such as forecast demand, population growth and availability.
Regarding corporate aspects of the UK water industry there have been recent acquisitions, with overseas companies and organisations now having a substantial stake in the sector. As a result of the Water Industry Act 2003, open competition is now possible for customers using large volumes of water.
As far as the future is concerned, there are several important points. First is the whole question of secure water supplies. Global warming will probably give rise to a mixture of extended dry periods (including winter) and also intense rain with severe flooding. The effects of climate change depend on the extent of warming. Significantly warmer long-term conditions could result in rising sea levels, presenting a challenge to the water industry in coastal areas. Planned large housebuilding schemes will require extra water services, as will the London 2012 Olympics.
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