Mr Mead said the government and OFWAT needed to help the water companies fund the changes.
The powers of industry regulator Ofwat will be strengthened in order to manage that increased competition.
Ofwat will now scrutinise the plans and make its decision in November 2009.
South West Water (SWW) customers can submit their opinions about water bills which will be presented to water regulator, Ofwat.
Until Ofwat stopped it, Kelda, the Yorkshire water business, hoped to hive off its water assets into a consumer-owned mutual.
Mr Smith also alleged the company had failed to meet Ofwat targets for fixing supply problems to properties within six hours.
Ofwat is also due to rule on how much the companies must invest in their services over the next five years.
If Ofwat sticks to its preliminary findings announced in July, water utilities will be forced to reduce their bills between 2010 and 2015.
Last year Ofwat told Pennon it could raise household bills for its South West Water customers by 25% in real terms over five years.
Ofwat and SWW are currently considering the findings of the report.
Yet in its last five-year investment period, in 2000, Ofwat had cut investment in the infrastructure by 11%, despite evidence that the system was in decline.
BBC: NEWS | Programmes | File on 4 | Neglected sewers threaten floods
Ofwat's chief engineer, Bill Emery, insisted there was no crisis in the sewerage network but said a monitoring system had been put in place to forewarn of collapsing sewers.
BBC: NEWS | Programmes | File on 4 | Neglected sewers threaten floods
The company, which provides water to 3.7 million homes and businesses in England and Wales, is already facing a fine from regulator Ofwat for missing earlier customer service performance standards.
Ofwat and SWW are currently considering the findings of The Walker Report, a government report which looked into possible ways of reducing the cost of water in the south west.
Northumbrian Water, which supplies 4.6 million people in England and Gibraltar, also said it was committed to cutting its leakage levels, and that it had met the targets imposed by Ofwat.
The amendment would have required industry watchdog Ofwat to publish a league table on the performance of water companies in achieving this aim, within a year of the bill passing into law.
Ofwat said it had closely scrutinised South West Water's proposals to ensure that customers pay no more than is necessary if the company is to continue to deliver a safe, reliable and efficient service.
BBC: NEWS | UK | England | Cornwall | Proposed 17% water bill increase
Friends of the Earth (FOE) has said that numerous wetland areas that provide habitats for unique birds and plants were not included on the list sent to Ofwat, the water industry's regulator, by the Environment Agency.
While the committee applauded plans to reform the water sector, it was concerned the bill left too much of the important detail to be decided by the industry's regulator, Ofwat - or to be introduced through secondary legislation, which receives less parliamentary scrutiny.
Ofwat has in fact been a little softer recently, ahead of its review for 2005-10: last winter it gave both Kelda and Severn Trent permission for interim price rises, and its chief, Philip Fletcher, admits that prices must rise to encourage investment in pipes and pumps.
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