Awash with supply?

25 / 09 / 2017

What business consumers need to know about changes to the water supply market.

What is happening?

From 1 April 2017, business consumers have been able to choose their water supplier in much the same way as they can their gas or electricity suppliers, where a range of independent suppliers compete for customers. The deregulation of English water is expected to affect c. 1.2 million businesses with water meters.

How will it work?

The network of water and sewerage pipes in a specific area is owned by each of the existing water providers. These water providers will act as the wholesalers in the market, selling water and sewerage services to the water companies, known as retailers. Having bought their wholesale services the retailers can then bundle these services with other value-adding offerings and sell them to non-household customers.

What are the benefits?

Giving consumers the freedom to negotiate better deals is expected to lead to vast savings for commercial property portfolios. Incumbent suppliers will look to defend their current market share, whilst those new retailers to the market will doubtless adopt aggressive pricing models to force their way in. This is evidenced when looking at Scotland, who, in 2008, were the first country in the world to open its market for water and sewage services for all public sector, non-profit and business organisations. Service costs in Scotland have been cut by £10 million since 2008. The increased competition will not only lower prices, it is expected to lead to further improvements as only those water companies that are first to innovate and invest in improvements to their services are likely to attract customers.

Benefits will also be seen in the ability to bundle together different utility packages, giving eligible consumers the opportunity to monitor their usage for supplies of water and electricity, for example, on one platform.

Multi-region businesses are anticipated to benefit most as the move also aims to simplify the water market for such consumers by giving them opportunity to take advantage of a single supplier across the range of their sites throughout the country and in this way allowing them to consolidate their accounts.

With the increasing need to treat water consumption with care, saving water is equally important and it is hoped that over the longer term proactively managing and monitoring water consumption will also result in environmental efficiency.

The deregulation of the water market offers massive potential for business customers to make additional savings and take advantage of efficient utilities.