Water regulator Ofwat has called for the water and sewage markets to be opened up to competition.
Ofwat says competition will help the sector to meet challenges such as climate change and growing population, as well as improve services for customers.
According to Ofwat, the current competition regime of water supply licensing is not working.
In more than two years, not one of the 2,200 eligible business customers using 50 million litres a year have switched supplier.
The watchdog plans to take steps to open up the market to new entrants, then start encouraging businesses to choose their water supplier.
Eventually, households will also be able to choose their supplier.
Chief executive Regina Finn said: “The current scope for competition in the water and sewerage sectors is severely limited by legislation, is confined to a small number of business customers and has not developed successfully.
“We propose that more of the market is opened progressively, starting with all business customers. In time households could be able to choose their water supplier, when the market is ready and safeguards are in place.”
“Competition will drive benefits such as greater responsiveness to customers’ needs, innovative approaches to adapting to climate change and downward pressure on costs.”
Ofwat said it wants competition to prove itself, with early priorities including the development of competitive retail services markets and tackling barriers to new entry to upstream water resources markets.
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