April 2017 represents a significant milestone, as the water market in England is deregulated.
What is happening?
Perhaps the best way to describe what is happening is to look at the example set by Scotland.
In 2008 the water market in Scotland was deregulated. Scottish Water remained the wholesaler – and created a retail arm of its own (Business Stream) – whilst other businesses were able to enter the market. These new retailers add their own service elements to the basic supply and market them to Scottish businesses in competition with Business Stream. Organisations then benefit from the ability to shop around in the same way you can with Gas, Electric & Telecoms.
In England, from April 2017 a similar breakup of the market will take place, although the picture looks more complicated with regional monopolies of more than twenty different companies. Whilst the physical supply of water itself will remain unchanged, it’s the added services that will be the main ‘difference’.
A major part of the work ERA undertake is a full forensic audit of a client’s water accounts, optimising tariffs, seeking out efficiencies, providing monitoring & management and recovering any historic over charging.
The opportunity that will be created by deregulation should not be underestimated. A process is about to take place that has already seen manoeuvrings from some of the major players:
- Severn Trent and United Utilities have joined forces as ‘Water Plus’
- Southern Water is exiting and has sold its books to Business Stream
- Thames Water is exiting and has sold its books to Castle Water
- South West Water has acquired Sembcorp
- South Staffs has acquired Cambridge Water
By the time you read this, it’s likely other deals will have been completed or are imminent as the market rebalances.
What do I need to do?
From 1st April 2017 eligible non-household customers will be able to choose who they buy their water and sewerage services from. This includes all eligible businesses whether large or small. The change is driven by the Government’s aim to introduce more competition into the water industry in England.
How it works now
All businesses receive water and sewerage services from their local supplier, who also provides the customer service, making them responsible for both wholesale and retail services.
Wholesale services include:
- Water supply
- Removal and treatment of sewerage
- Retail services include:
- Billing
- Meter reading
- Customer queries
How it will work after 1st April 2017
Businesses will be able to choose who supplies their retail services for water, sewerage and trade effluent.
Having a choice will mean you’ll be able to consider the best services for your business, which could include things like:
- Price (however ERA are currently predicting only a 1% or 2% discount)
- Account consolidation (having one, instead of multiple suppliers)
- E-billing
- Billing format (choosing suppliers who offer ‘spreadsheet’ billing)
- Contract or payment terms
- Customer service
Who are water retailers?
Retailers are companies that have been granted a licence by the water regulator (OFWAT), to provide retail services to non-household customers.
What happens next?
In order to prepare for market opening, ERA would recommend that data is collated as soon as possible. This will allow analysis of current spending and supply details are optimised in readiness for when the market opens for business on the 1st April 2017, putting you in the best position to make the most of the opportunity.
Article by: Phil Howarth