Severn Trent pushes for water trading to end droughts



Droughts could become a thing of the past if water companies are given the green light to trade supplies in forthcoming legislation, according to Severn Trent chief executive Tony Wray.

Water firms are not allowed to buy and sell water from each other, but proposals to set up a market for water trading are expected to be included in a Government White Paper due later this year.



Wray, a longstanding supporter of such trading, believes water could be efficiently transported from regions of plenty to drought areas.



Thirsty work: Water firms are not allowed to buy and sell water from each other, but proposals to set up a market for water trading are expected to be included in a Government White Paper due later this year

Water would be transported by pumping it into canals and rivers and extracting it further down and feeding it into a network of pipes.

'The UK does not have a natural shortage of water, yet we have regular shortages and the economic consequences are huge,' said Wray.



'Water trading would use networks which already exist. These would be connected to bring greater intercapacity and that would be a better way of giving greater security of supply to customers.

A Department for Environment spokesman told Financial Mail: 'Water trading will be something we look at in the White Paper.'



Wray is also pushing for regulator Ofwat to relax its rules on mergers and acquisitions, whereby a water company's bid for a rival results in an automatic referral to the Competition Commission.



This is partly because Ofwat is reluctant to have fewer than the current 22 water companies, as it would make it more difficult to compare performance.



Water bills have risen nearly 50 per cent since privatisation in 1989.



Ofwat chief executive Regina Finn has indicated that she might look more kindly on mergers if companies were prepared to introduce some competition for business customers, for instance.



Under this idea, larger users could choose their provider in a way that would not be feasible for domestic customers.

