ABSTRACT
From the outset it was obvious that if the RWAs were to be privatised they would have to remain firmly regulated both in terms of their environmental obligations and in terms of their charges and services to water customers. In relation to environmental matters, specifically the management of river systems and other water resources, it would be necessary to have a robust structure of regulation to ensure that the privatised companies did not minimise water supply and waste water treatment costs while neglecting the external costs imposed on the environment. In terms of prices and services to water customers, there seemed to be very limited prospects for competition because of the high costs of installing and maintaining the water sources, pipelines and treatment plants. Water services appeared to be the natural monopoly par excellence and although some activities such as billing and repair might be further contracted out, it seemed certain that the new water and sewerage companies (WSPLCs) would have considerable monopoly power in the regions they served. They would also have some continuing regulatory powers over any statutory water companies (SWCs) operating within their boundaries. A privately-owned WSPLC might be expected to abuse this monopoly power through high charges and poor quality service.
