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Utilities & Environmental

Can My Business Change Water Services Supplier?

By 25th November 2013March 16th, 2022No Comments

If your business premises are located in England or Wales, then the short answer is No. In theory, since the Water Act of 2003, sites consuming over 50,000m3/yr are eligible to do so, but since this facility has been available the number of transfers implemented can be counted on the fingers of one hand.  The problem seems to have been that the difference between the wholesale and retail prices was so small as to make the margins and benefits insufficiently attractive.

However, the Government published its Draft Water Bill in July 2012, the progress through Parliament of which you can follow here, and one of the key proposals is to reform the market for business water customers in England.

The Bill “will abolish the threshold in England so that any business customer or public sector-body can choose its suppliers”. Furthermore the Bill “will also create a sewerage licensing regime in England parallel to the water supply licensing regime. This will further incentivise customers to consider switching their suppliers as they will be able to tender for water and sewerage services at the same time and choose single or multiple suppliers”.

The Welsh Government has yet to decide whether to embrace the abolishment of thresholds as proposed for England, so there is some uncertainty in Wales until its response is made known.

Under the Water Industry Act 1991 water and sewerage companies cannot charge customers unless their charges schemes have been approved by Ofwat in advance. The Bill would repeal this duty and replace it with a duty for Ofwat to produce rules which companies would be obliged to follow in setting their charges schemes. This is a major change, and is intended to remove a significant barrier to development of innovative tariffs.  Other measures in the bill are intended to pave the way for efficiencies in the delivery of non-household retail water services, and to create the competitive market.

The target date for implementation? According the draft bill, “High-level analysis of the inputs required suggests that a realistic target date is likely to be April 2017. However, we will confirm this through the development with key players of a roadmap to market opening”.  So we’ll have to wait and see….

Business customers with their premises in Scotland on the other hand already have the opportunity to contract with alternative providers for water, wastewater, effluent & drainage.  There are a small number of suppliers active in the market, and quotations are provided in the form of a percentage discount against the Water Industry Commission for Scotland Default Charges.

Managing down your costs by going down this route is possible, but just as when comparing business energy contracts, the devil is in the detail, and when considering a switch of supplier, care needs to be taken in fully understanding the contractual terms, how the discounts are to be applied and whether any variance in policies with the incumbent supplier may have an impact on your business in the future.