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Water Deregulation
What does Water Deregulation mean?
Due to take place in April 2017, serious reform is taking place in the water markets across England.
When the water market deregulates non-household customers will be able to switch water supply to any
company that is a licensed provider. A similar process previously occurred in Scotland. Having studied
the transition closely, Water Services Regulation Authority (OFWAT) have been able to learn many lessons before the same widespread water deregulation is applied throughout England.
What were the outcomes of Water Deregulation in Scotland in 2008?
Entering into the unknown as the first country to do so, the Scottish Water market was deregulated in
2008. Through water deregulation, the non-domestic water market saw 130,000 businesses given the
choice to switch supplier. Alongside this deregulation, several new retailers of various sizes joined the
marketplace. These licensed providers now buy water services from Scottish Water, bundle this with their
own services and added-value offerings and then sell the resulting packages on to Scotland’s businesses.
In the first 5 years to April 2013, water suppliers noted the following averages in their offerings across
both domestic and non-domestic consumers:
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Achieved more than £35 million in Water efficiency savings
Experienced a 26% increase in customer satisfaction
Made available more than £30 million worth of discounts
Saved public sector customers more than £20 million in three years
Helped customers to save 16 billion litres of water and more than 28,000 tonnes of CO2
What will happen when water is deregulated in England?
The planned water deregulation for England will see a process very similar to that of Scotland’s, with OFWAT factoring in any intricate changes where the Scottish deregulation was met with issues. Currently a
regional monopoly of more than twenty different companies, the administrative changes to take place will
see a higher level of complexity than that which occurred in Scotland. Ultimately however the end goal
will be the same: while nothing about the water that reaches the consumer or the infrastructure used to
bring it to the customer will change, account provision and billing will be managed by a licensed provider
of choice.
A summary of the changes to take place following the water deregulation in April 2017 will be
as follows:
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All business, charity and public sector customers in England will be able to switch their water and
sewage supplier
New businesses can enter the water sector and provide new sources of water or sewage treatment
services
A national water supply network will be established to make it easier for water companies to buy
and sell water from each other
Owners of small-scale water storage can sell excess water into the public supply
What are the current issues with England’s regulated water market?
The position of the water market in England currently means that a vast majority of businesses are
unable to switch their supplier. Whilst some larger businesses (using more than 50 megalitres annually)
may have the option to switch supplier, any other business that is dis-satisfied with how it’s water supply
is managed only has the option to file a complaint or withhold payment. Due to a lack of competition,
complaints often take time to have their desired effect. In addition, unlike domestic consumers, business
customers can have their supply stopped in the event of a failure to pay, thus rendering a protest of
withholding payment unviable. In summary, business customers are currently relatively powerless to
effect change, and consequently have to tolerate the service they receive.
T: 03330 433233
E: [email protected]
W: bcrassociates.co.uk
Business Cost Reduction Associates Limited. Registered and Postal office: Renslade
House, Bonhay Road, Exeter EX4 3AY .Company registration: 5537190.
© 2016 BCR Associates
Building trusted
business relationships
What will the landscape look like following the deregulation of the water market?
Service improvements:
After the water market has been deregulated across England (2017), business customers will have
the power to choose their supplier. Both domestic and non-domestic consumers will be able to choose
a provider that can deliver the best offering according to the following criteria:
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A provider that is renowned for providing customer service
A provider who offers added-value packages that best suit their individual needs
A provider who can offer cost savings on their water supply
Due to this increased competition, suppliers will be at greater risk of losing their customers for a
failure to provide a service that out-delivers their competition. Operating exactly as a saturated
market operates in the retail market, water providers will have to provide an offering that is better to
that of their competitors. Service provision and price will therefore form a large part of the decision
process made by businesses.
Innovation and efficiency:
Complementing this improved service, DEFRA believe that water deregulation will encourage
innovation and efficiency from water companies due to the increased commercial need for them to
adhere to their consumer requirements. With the water market facing challenges of a growing
population and changing climate, the introduction of deregulation will be welcomed despite the shackup in the water market.
What are the risks to your business presented by water market deregulation?
Although water deregulation will provide a much more consumer friendly market through improved
service and innovation, there are risks for non-domestic consumers. The main risk for businesses is
that they are hooked in on what appears to be a favourable contract but it may come to light that
contracts hold hidden intricacies that could work for the supplier and against the consumer. It is
essential therefore, that although markets will provide a more favourable environment for improved
service delivery and competition on price, non-domestic consumers should not enter into a new
contract expecting the very best solution for their business. As with other saturated, de-regulated
markets, there is potential for consumers to lose out. We recommend businesses should seek expert
advice to avoid such a scenario.
5 steps to managing your water supply effectively:
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Understand who your current supplier is and what their future plans are when the market is
deregulated i.e. any letters from your current supplier relating to additional meters or charges
Gather together your current and historic water usage data, this will provide you with a great
platform for obtaining a contract that is right for your business
Understand exactly what you want from your new water contract i.e. a focus on price, service,
flexibility or a combination of all these factors
Take meter readings regularly if you don’t currently do so, in order to provide more leverage for
contract negotiations
How can BCR Associates help manage the transition to water deregulation?
Utilising years of experience and up-to the minute knowledge of the water market, BCR Associates is
fully equipped to offer expert advice on how businesses should tackle the water deregulation process.
From guidance on how it will affect your business and your contractual obligations, to choosing a supplier* that is best for your business, BCR Associates can guide and manage your business safely
through the deregulation of the water market.
*Minimum usage applies
T: 03330 433233
E: [email protected]
W: bcrassociates.co.uk
Business Cost Reduction Associates Limited. Registered and Postal office: Renslade
House, Bonhay Road, Exeter EX4 3AY .Company registration: 5537190.
© 2016 BCR Associates