A price war over water charges is set to break out in Scotland after two private-sector companies drew up plans to supply around 130,000 non-household premises north of the border.
Scottish and Southern Energy and Reading-based company, Satec are to challenge the current monopoly held by Scottish Water to supply water to places such as schools, hospitals and all business premises. More companies are expected to follow suit and bid for a part of the lucrative water market which is open to competition from next April.
The previous Scottish Executive drew up plans for a free market for non-domestic water supplies as an alternative to full privatisation.
The interest of Satec and Scottish and Southern Energy to compete for part of the business market was revealed by Sir Ian Byatt, chairman of the Water Industry Commission as he launched its annual report in Edinburgh.
Sir Ian added: "We are encouraged by the interest of potential new entrants into the market. Competition will lead to greater innovation and lower costs to customers."
Mr Byatt said it had been a good year for customers of Scottish Water. Under the price limits set by the commission in November 2005, household bills have risen by 3%, less than the rate of inflation, compared with 7% south of the border. Non-household customers have had increases held to 2%.
He was concerned the Scottish Water £2bn capital programme for the years 2006-10 appeared to have made a slow start. He said customer service, while still not as good in Scotland as in England, had improved significantly but there were still problems to be dealt with, such as the amount of time it took customers' telephone calls to be answered.
Commenting on the opening-up of the water market, Iain McMillan, director of CBI Scotland, said: "We wouldn't want to make any comment on the individual companies that are considering bidding. But we welcome the fact the market for the supply of water to non-household customers is being widened.
"It is all about introducing competitiveness into the water industry in Scotland. It will improve performance in terms of keenness on pricing to the business community."
The SNP executive last month ruled out turning Scottish Water into a mutual company.
An executive spokesman said: "This report demonstrates the fact the public sector is delivering for the people of Scotland."
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