Ofwat revokes Aquavitae's water supply licence

On 20 June 2008, the Water Services Regulation Authority (Ofwat) announced that it has issued a notice to revoke the water supply licence granted to Aquavitae (UK) Limited, which has gone into administration. Aquavitae has seven days to provide Ofwat with compelling reasons why the licence should not be revoked. Aquavitae was one of the few companies to obtain a licence under the water supply licensing regime that came into force on 1 December 2005. However, it was not yet supplying any customers under the licence. Despite this, Ofwat states that it is acting swiftly to protect potential new customers.

In March 2008, Ofwat published a determination in relation to the wholesale access charges to be charged by Anglian Water to Aquavitae to enable it to supply customers (see Legal update, Ofwat publishes determination for wholesale access prices offered by Anglian to Aquavitae). Ofwat stated that it was disappointed by the level of discounts that it was able to determine under the existing statutory regime. Ofwat notes that the water supply licensing regime, which was intended to introduce competition for water supply to large business customers, has not been successful. It has made recommendations to government as to how the water sector can progressively be opened to competition (see Legal update, Ofwat consults on proposals to introduce water competition).