Consumer Choice in the Water Sector

Choice in the water sector has traditionally been driven by government and providers rather than by customers. This note examines the issues which arise in considering customer choice (especially choice available to final consumers), the available evidence, and potential changes with alterations in the industry’s structure. Here we identify and summarise the evidence in each area. The paper first examines individual choice and then possibilities for collective choice. The latter will be particularly important if some form of negotiated settlement is pursued, since household consumers will need to have a ‘legitimate voice’. The implications for both individual and collective choice of market opening and of potential developments in the industry are assessed, using the three scenarios identified by Ofwat. The implications for the principles of better regulation are addressed.