Ofwat is becoming “a fundamentally more pro-market” regulator, according to its chief executive Cathryn Ross.

Ofwat chief executive Cathryn Ross

Speaking at Utility Week Live in Birmingham today (Tuesday May 17), Ross noted that Ofwat, like the water sector as a whole, is undergoing a transformation.

She said the old way of regulating has been delivering diminishing marginal returns: “Just cranking the handle on the old regulatory model is not going to deliver transformational efficiencies, and in fact it isn’t even going to deliver the same efficiencies that we’ve been used to.”

Ross said the regulator is adopting a new model instead, moving away from an approach “that was rather administrative, very much one size fits all, rather intrusive” and towards one which is “much more framework based, more proportionate and targeted, and fundamentally more pro-market”.

She said markets are of value to the water sector because “they create options, they enable choices, and those choices reveal information.” She added that such information could reveal to others “the value they can add and the opportunities they can realise.”

“We see scope for new models, with companies potentially choosing third party solutions that include designing, building, owning and potentially also operating new infrastructure,” Ross concluded.

As well as the creation of a retail market for non-household customers, due to open in April 2017, and the possibility of a domestic retail market, Ofwat is looking at creating markets on the wholesale side of the value chain, in water trading, sludge and infrastructure provision. These reforms were laid out in the Water 2020 consultation document last year, and Ofwat is due to publish a document outlining its next steps next week.