LONDON (Reuters) - Britain's government set out plans to reform the water industry, which it said could save the UK economy 2 billion pounds ($3.10 billion) over the next 30 years.
The government said on Tuesday it wants to make it easier for companies in England and Wales to merge, for new players to enter the market and for businesses to switch their water suppliers.
Scotland has already made similar reforms to its water market and its public sector alone is set to save around 20 million pounds over the next three years.
'This draft bill will create a modern, customer-focused water industry and for the first time all businesses and other organisations will be able to shop around for their water and sewerage suppliers,' said Secretary of State for Environment Caroline Spelman.
'By slashing red tape we will also stimulate a market for new water resources and incentivise more water recycling.'
The draft bill will be scrutinised by Parliament and industry and a realistic target date for opening the retail water market is April 2017, the Department for Environment, Food and Rural Affairs (Defra) said.
The proposals come as heavy rainfall continues to threaten large parts of Britain, forcing the UK environment agency to enforce seven flood warnings and 36 flood alerts in England late on Monday.
REFORM
In the draft bill, the government proposed the removal of regulations that act as a barrier to new entrants wishing to enter water and sewerage markets.
New entrants currently have to negotiate with up to 21 water and sewerage companies in England and Wales before entering the market but under the reform, water industry regulator Ofwat will set out conditions for firms to follow instead.
The draft bill also proposed reforms to a special merger regime imposed on the sector, which limits companies' ability to merge or be taken over by more efficient competitors.
Under current rules, a merger proposal in the sector has to be referred to the Competition Commission if the turnover of the company buying or being bought out has a turnover of 10 million pounds a year or more.
If reforms are passed, the Office of Fair Trading and Ofwat will consider whether a merger is likely to harm competitiveness in the sector instead of making an automatic referral to the Competition Commission.
At 1128 GMT, shares in Pennon were up 0.2 percent to 770 pence per share and United Utilities was flat at 676 pence, while Severn Trent shares fell 0.5 percent to 1,682 pence.
Several water firms contacted by Reuters declined to give an immediate comment.
Defra said the reforms will also make it easier for businesses and public sector bodies to switch their water and sewerage supplies, allowing them to get more competitive prices and improve their efficiency.
It will also introduce regulatory incentives to help make water trading more attractive. ($1 = 0.6442 British pounds)
(Editing by Elaine Hardcastle)
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