What is changing in the Water Industry?
Deregulation of the business water market in England is set for April 2017. Wales has opted out of deregulation and will continue to operate as a monopoly under Dwr Cymru (Welsh Water). Northern Ireland will also remain unaffected. Scotland deregulated in 2008, and although deregulation was slow here with the default provider (Scottish Water’s Business Stream) keeping more than 90% of the market initially, momentum has now been gained and deemed successful.
Prices will be re-set on the 1st April 2017 and these will be focusing on simplifying pricing structures rather than adjusting price levels. The next change is scheduled for April 2020, therefore in the meantime it is unlikely that there will be enough margin for suppliers to offer big discounts until then.
Licensed Providers (retailers) will buy water services from the water companies, bundle this with their own services and value-add offerings, and they will then sell their “packages” on to England’s businesses. There are about 18 retailers lined up in England: some retail arms of the larger water companies, as well as some less familiar names. Some existing companies may not choose to become retailers, and so if you are supplied by one of these you may notice a change of supplier name on your bill post April 2017. This should not affect supply of your water in any way, it’ll simply be a billing change.
What are the benefits to the you, the customer?
- In the short-term, from April 2017, the cost savings are forecast to be around 2-5%, and will vary by site and location. In the long term (post-2020) larger savings are expected.
- For businesses with multiple sites based in either England or Scotland, or both, from April 2017 business will be able to consolidate water supplies across their portfolio which will simplify management of their water supplies, and also save time and money.
- There’ll be a greater choice of service offerings from suppliers; bundling of sewage, better billing and customer service responses. Suppliers should also be able to offer water efficiency advice, improved/ bespoke metering solutions, and in future management of new connections.
- In addition to improved service, the competitive nature of the industry should see more innovation and efficiency from suppliers. These are important measures which are needed to tackle the issue a growing population and changing climate, and is why DEFRA have been championing deregulation of the industry.
What can I do in preparation?
You can prepare for water deregulation now.
- Make sure meter reads and billing are as accurate as possible now, as correct data will allow you to tender effectively when you need to.
- Make sure your business premises’ rateable value is as accurate as possible, as some price elements on your water bills are based on this.
- Make sure meter details, site addresses and billing addresses are correct, as to transfer to a different water supplier a site identity is required (SPID) and if this identity cannot be accurately generated it could cause delays.
- Make sure your credit rating is good as, as with any competitive tender, the better your credit history, the more choices a business will have. A poor credit rating may prove prohibitive to changing suppliers.
The deregulation of the supply of water will create a more competitive supply environment which ultimately will increase customer service and water management through supplier choice. Cost savings initially are only expected to be 2-5% but ultimately, more post 2020, there will hopefully be more significant cost savings available. The biggest benefit in the short-term will be to multi-site organisations with sites in England (and Scotland) where they can consolidate their water supplies with one supplier of choice – giving you less admin, more time, more savings.
Make sure you prepare (see ‘What can I do in preparation?‘ above) to aid a supplier change when you choose to do so.
The deregulation process will certainly be an upheaval, but with Scotland having already gone through the process hopefully there have been lessons learned.
As with any competitive environment, water deregulation will bring challenges to businesses. A tender process takes time and Auditel may well be able to help you through this process, as we do with a multitude of other business cost areas (electricity, gas, telecoms, waste, rates etc).