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Access pricing methodology
The potential for competition in upstream activities in the water sector has been considered for some time. Through the Water Supply Licensing (WSL) regime, it has been possible for alternative suppliers to request access to company networks since 2005, but in practice competition has yet to make an impact in this area. The new provisions in the Water Act 2014 give Ofwat the flexibility to design a regulatory regime that makes such competition viable. Developing a regime that allows efficient entrants to compete and delivers real benefits for customers is a subject that requires careful thought. As part of its Water 2020 project, Ofwat asked Severn Trent to look at the issue of Access Pricing; working with Oxera, we have put forward proposals for reform which - we believe - could enable competition to develop without undermining the resilience of the industry.
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