WATER UTILITY Kelda this week scrapped plans to sell Yorkshire Water to a customer owned company after the water regulator voiced fears for water quality and infrastructure maintenance.
Ofwat criticised Kelda's plans to separate Yorkshire Water's water assets from its maintenance and operation activities after the Drinking Water Inspectorate expressed fears that it would lose control of water quality.
Ofwat remained unconvinced that maintenance of water industry assets would not suffer.
Kelda Group executive chairman John Napier said he would 'seek a way forward that is acceptable to the director general of water services and others.'
He said Kelda still believed a new structure was required and the company is expected to produce new plans soon.
Director general of water services Ian Byatt was also concerned that the new water mutual would lack independence from its former parent, especially as there were plans for it to employ former Kelda directors. This could have led to inefficiencies in the procurement of infrastructure maintenance and operation services.
'A mutual must be independent of previous licence holders.' he said. 'Kelda seems to have been slow to appreciate this.'