Scheduled for April 2017, water deregulation will, for the first time, enable non-domestic users in England to choose their own retail supplier.
Currently, the business water market is split by regions, whereby any business using under five mega litres at any one site must use the water supplier which operates in their region. However until 2017, only the largest water users in England are currently free to switch suppliers, offering them some degree of choice. The introduction of water deregulation however will mean more competition will be generated, creating an opportunity to reduce costs, save money and even change suppliers for non-domestic users.
With the business water industry already having been deregulated in Scotland in 2008, customers have since experienced better deals.
With this in mind, the main difference between now and 2017 will be the ability to have your water usage and sewerage billed by the supplier of your choice. In addition, all existing water companies will become wholesalers and will have to form a retail company to trade in this new market.
Wholesale prices will be fixed until April 2020. A review will then take place to set new rates using a discount from the published tariff rates.
Currently, England has more than 22 water suppliers.
Current regional restrictions has led to:
So what will this water market reform achieve?
This deregulation of the water market will give businesses the ability to:
What’s still required from Ofwat & water retailers?
In order to achieve a successful implementation, we believe that the following is still needed:
So how much can businesses expect to save?
With most water companies working on a gross profit of about 1%, margins will be tight. Most water companies have estimated a 1-2% saving by switching supplier.
What makes an ideal water retailer?
At STC Energy, the majority of our clients have multiple sites across England and are currently using several water suppliers based on their regional location. This essentially means multiple suppliers and multiple bills which equates to higher expenditures and a heavier workload. However water deregulation will enable businesses and our clients to consolidate their bills by opting for just one supplier. This option will enable us to combine our clients billing, saving them time as well as administration costs.
At STC we have been collecting and validating water invoices for our customers for a number of years. This data will be invaluable when preparing for tenders with other water suppliers in the future.
Alan Little is the Energy Expert and Business Development Manager at STC Energy – a specialist energy management consultancy and leading provider of bureau services in the UK.
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