The government has opened the UK's water market for competition to improve services and savings

 
Courtney Goldsmith
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Last year Ofwat said water customers were being left behind due to lack of competition (Source: Getty)

The UK's water market entered new territory today as it opened for competition, giving more than 1.2m businesses, charities and public sector bodies the option to choose their water supplier.

The move will deliver up to £200m of benefits to the economy and water customers over 30 years through improved service and better value for money, according to the Department for Environment, Food and Rural Affairs (Defra).

All types of businesses will be able to find the water deal that works best for them rather than relying on regional suppliers.

Read more: Regulator calls for more competition in the water market

Environment secretary Andrea Leadsom said "Opening the market is an historic milestone, paving the way for innovation and efficiency and giving customers the same choice over their water retailer as they currently have for their energy and other essential services.”

Scotland is the only other country with a competitive water market, having deregulated in 2008.

Cathryn Ross is chief executive of Ofwat, which will regulate the new market. Ross said she's "hugely optimistic" about the changes and benefits ahead of what is the single biggest change to the water sector since privatisation.

"It is important that we at Ofwat maintain effective oversight of how the new market is working and what customers are experiencing. This will mean that we can step in if we need to, to make sure customers are protected."

Read more: London's super sewer to add £25 to water bills by the early 2020s

Market Operator Services Ltd (MOSL) will operate the market on behalf of its water company members. MOSL chief executive Ben Jeffs said aside from the prospect of better prices and services, opening the market will create new opportunities and challenges for the whole sector.

In the coming weeks, utilities will be awarded billions of pounds worth of water contracts.

Read more: Thames Water has been handed a record fine for pollution

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