Inset appointments are allowed when a site is not served by an existing appointed water company.
Currently this area is supplied by Wessex water - and Ofwat is facilitating Scottish and Southern Energy's entrance into the market so as to provide an element of competition.
Ofwat director of regulatory finance and competition Keith Mason said the news marked "a good step forward for competition within the water industry".
"Scottish and Southern will be a new player in the industry but it already has a good reputation for customer service in the gas and electricity sectors," he continued.
"We expect it to bring that expertise to the benefit of water and sewerage customers in this small area."
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