Ofwat: meeting the demand for water, twenty-fourth report of session 2006-07, report, together with formal minutes, oral and written evidence

The Water Services Regulation Authority (Ofwat) is the economic regulator of water services in England and Wales, with responsibility for setting price limits that allow the 22 main water companies to secure sustainable supplies at the lowest cost to the consumer. Following on from a NAO report (HCP 150, session 2006-07; ISBN 9780102944181) published in January 2007, the Committee's report finds that Ofwat needs to make changes to its regulatory system, in particular on water efficiency, data quality, and enforcement, given the increasing challenges to water supplies due to low rainfall and predictions of housing growth. Ofwat does not understand clearly how consumers use water and has not collected enough robust evidence on which water efficiency projects are most effective in helping consumers to use less water. Despite some progress, Ofwat still depends on unreliable data with regard to both supply and demand, and also needs much better data on per capita consumption. It has had some success in encouraging sustainable investment by companies, but needs to be more active in using sanctions against companies that under-perform against their commitments to meet all reasonable demands for water, while limiting environmental impacts. Ofwat should press companies to encourage more consumers to use meters by, for example, promoting the benefits of metering to consumers as well as routinely installing meters when there is a change of building occupancy.