Introducing rival firms to the water market could have "financial and service benefits," save customers around 8 a year and allow them to switch providers, regulator Ofwat has argued.

As it stands, water customers in the UK are served by companies with regional monopolies, meaning homes and businesses have no choice about who supplies them.

However if the system is overhauled to introduce competitor firms, customers could one-day have "the freedom to choose their supplier" - something 56% of them would support, according to the regulator's research on's forum.

Ofwat, which regulates water in England and Wales only, has been reviewing the possible pros and cons of opening up the market in England after the government tasked it with looking at the issue.

It said any opening of the market would need to be met with more regulation to ensure "customers receive good information [and] are not subject to misleading or high-pressure sales techniques." It also admitted changing the system would have "significant set-up costs" which must be weighed up against the benefits.

As part of its review, Ofwat says it spoke to a number of potential challenger companies which were keen to start supplying water.

Ofwat's report doesn't discuss detailed plans for how increased competition would work - it just looks at the principle. The report has now been submitted to the government, which will decide if and how to implement its findings.

Martin Lewis
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What does Ofwat say?

Chief executive Cathryn Ross, said: “We are living in an age of retail revolution, but water customers are being left behind.

“The service offers from water companies can feel behind the curve compared to the innovation customers benefit from when buying other goods. The uncomfortable truth is that, when it comes to retail offers, water companies provide an analogue service in a digital age.

“Customers tell us they think they should have the freedom to choose and don’t understand why water is the only retail market in which there isn’t some form of competition.

“But, of course, this isn’t a one-way street. There are significant costs to be considered, and it will be important to ensure that customers are treated fairly in a competitive market and that vulnerable customers are protected. The decision for the government to make is whether the potential benefits outweigh the costs and risks.”

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