Case Studies

England and Wales

The present organizational setting of the water sector in England and Wales was introduced in 1989, with the privatization of the existing ten regional water supply and sewage disposal authorities (Scotland and Ireland refused to apply the privatization model and stayed with state-managed water utilities). The privatization followed a succession of institutional and political rearrangements that took place since the early 1970s. Then, a radical reorganization was carried out aimed mainly at rationalizing and centralizing a highly disintegrated public utility sector that had grown over a very long period of time. The intricacies of the reorganization carried out in 1973 and the eventual privatization of 1989 cannot be yet entirely elucidated, as the processes set in motion are still developing and subject to close scrutiny. After a serious drought in 1995-96 exposed the deficiencies of the system, in particular the lack of compliance with investment targets (especially pipe renewal and leakage reduction) and the absence of long-term planning, the water regulators set much stricter controls over the private operators, including a substantial price cut for 2000-2001. As a result, some of the private companies have sought to abandon the model based on private shareholders ownership and adopt alternative organizational models including the partial or total collectivization of the operations. In this connection, the Welsh water utility Glas Cymru has become the first privatized company to abandon the system by adopting a mutualized model of management, which has set a significant precedent. Although the rest of the industry in England and Wales continues to be run on a for-profit basis, there is an ongoing public debate about the future of the sector. This case study will provide an excellent benchmark for the design and functioning of regulatory systems for the control of economic, environmental and quality aspects of WSS, while also offering important lessons about the conditions and barriers affecting successful private involvement in WSS.

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