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Utilities & Environmental

From April 2017 businesses can switch water supplier

By 18th November 2016April 4th, 2019No Comments

What’s happening to my water supplier?

From 1st April 2017 all non-domestic water supplies in England will be deregulated (Wales is deregulated only for large consumers and Scotland deregulated in 2008).

Non-domestic customers will be able to choose who supplies their water/waste water services in the same way as they choose an energy supplier.

Background

All UK water companies have historically been regional monopolies. In 2008 Scotland led the world by deregulating water and wastewater supplies for non-domestic customers. Scottish Water spun off its retail arm into a legally separate entity (Business Stream) who inherited 100% of the market. Five years later Business Stream claimed credit for £35 million in water efficiency savings and a 26% increase in customer satisfaction.

Business Stream suffered only a slow erosion of their initial 100% market share because the wholesale/retail margin (12%) was insufficient to entice much competition. Eventually the Water Industry Commission for Scotland reduced wholesale prices which has allowed discounts nearer to 20%.

From 2011 onwards, English non-domestic customers using more than five million litres per year/per site have been allowed to choose a supplier – however this only affected the top 27,000 customers. 1st April 2017 will herald a big change when all English non-domestic users (business, charity and public sector) will be allowed to select both their water and waste water supplier from the UK’s 18 water retailers.

How will the market work?

Much the same as the energy market. Water companies will be referred to as wholesalers and will no longer sell water and waste services direct – they will sell via retailers. However, many water companies have created a retail arm in order to do both.

The 18 retailers so far announced include Thames Water, Severn Trent, Veolia, Scottish Water (t/a Business Stream), SW Water (t/a Source for Business) and United Utilities. “Retail only” participants include Aimea, Castle, Clear Business, Cobalt, Commercial Water Services, Everflow, Kelda, NWG and Water 2 Business.

What is the opportunity?

Multi-site customers who have previously wrestled with multiple accounts with a multitude of different water companies will be able to negotiate nationally and enjoy consolidated billing from a single retailer.

For single site customers the benefits will be less dramatic. The wholesale/retail margin split will not be reviewed until 2020 so – echoing the Scottish experience – competitive discounts are unlikely to exceed 5%.

If retailers cannot manoeuvre on price they will do so via service improvements such as electronic billing and water efficiency advice.

Customers looking to switch suppliers will need to discover their SPIDs – Supply Point Identification Numbers. Both the incoming fresh water supply and the outgoing waste water/sewerage will have one. These should be available from April 2017 but are unlikely to appear on customer bills immediately, so request them from your current supplier.