Chris Quinn, commercial water manager at Orchard Energy, offers his expert advice on negotiating your water contract early ahead of the non-domestic water deregulation in April next year.
From the 1 April 2017, retail competition will be introduced in the water market in England, allowing businesses to switch water supplier for the very first time.
But you don’t need to wait until then to start negotiating your contract. In October what’s called a ‘shadow operation period’ will take place. This is when the regulator will set the prices for the new competitive retail market, which will commence on 1st April 2017.
October is significant because it is the first opportunity businesses will have to give notice of their intent to switch to a new licensed provider. Those who do nothing will remain with your current supplier, unless the supplier withdraws from the market, in which case you will be ‘redistributed’ to another provider. This could mean missing out on discounts and benefits.
There are 1.2 million potential customers in England who will be looking to switch come April 2017. My advice would be to get ahead to avoid delays in setting up your contract and to ensure you are able to negotiate the best rate possible for your water supply.
The water market is heavily regulated which means there’s no drawback to negotiating early. Furthermore, the prices won’t change after being set by the regulator on 1 October. If anything, customers who leave switching to the last minute will be at risk of losing out on four to five months of potential discounts. Can you imagine if every customer went to the market at the same time? This is why the regulator allows a period of ‘shadow operation’ for businesses to take advantage now.
Ultimately if you ignore the switch you’ll be paying too much and even though you many only see a discount of 5%, this can be a valuable saving for your business.
Here are my five top tips on how to begin the switching process:
1. Consider your options - it’s the first chance you’ll have to analyse the market, so take advantage of this opportunity. If you’re short of time and worried about missing out on the best tariffs, why not work with an experienced utility broker to handle the process for you?
2. Get your data cleansed by an independent utility specialist before going to the market. With such tight margins available, any discrepancies within your bill have the potential to affect the price you’re able to achieve when you put your business out to tender. An independent broker can carry out historic invoice analysis to find out if you’re being charged correctly.
3. Manage and track your water usage as this can impact on your quote.
4. Become water efficient by investing in automatic meter reading (AMR) and smart metering to control your data.
5. You’re now switch ready! Prices will be set in October so start negotiating now to ensure you obtain the best contract terms for 1 April 2017.
It is vital businesses take up this opportunity and embrace retail competition. I firmly believe that in doing so customers themselves will make this market a success.
Chris Quinn has 16 years’ experience in the water sector, having worked for big name suppliers including Scottish Water, Business Stream and United Utilities. For eight of those years he worked in Scotland where competition was introduced to the non-domestic water market in April 2008.
To contact Chris, or a member of the water services team at Orchard Energy email firstname.lastname@example.org.