How can my business benefit from England’s water deregulation?

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Since April 2017, over 1 million businesses in England have been free to switch to a new water supplier around the country instead of their regional supplier. The English water market deregulation was the largest shake-up of the industry for almost three decades, and followed the same change in Scotland, the first country in the world to deregulate non-domestic water supply nine years ago. Before then, Scottish Water dominated 99% of the country’s water infrastructure.

Clear cost-savings and business benefits

In the early days of deregulation in England in 2017, it took months for businesses to switch supplier, but now customers can expect to switch in just a matter of weeks. Likewise, in some cases two years ago it was taking months just for bills to come through, however, this process has now been ironed out with bills being issued much more quickly.

There has been a positive switch in the customer service culture. In order to win and retain customers, retailers have become more responsive to their needs, reducing tariffs, and encouraging customers to maximise their water consumption and be mindful of potential water shortages.

Typically, an immediate small percentage saving is available for the average small business that switches. In Scotland, bigger discounts are now prevalent, but that took a few years to filter into the market. It’s likely that discounts will increase in size over time as the new English market matures.

Ofwat, the economic regulator of the water sector in England and Wales, originally set limits on the price retailers can charge businesses that haven’t yet taken advantage of deregulation. These wholesale and default prices were established when the market first deregulated and protected until 31 March 2019.

Ofwat is currently working on its new price review regime which will consult on charges up to 31 March 2025, which is the next regulatory period. This will determine domestic and non-domestic charges for the five years following 1 April 2020.

So, what can the English open water market learn from its Scottish counterpart?

England has a considerably larger market then Scotland but being able to learn from Scotland’s tried and tested processes should enable England’s open water market to progress a lot quicker.

The Scottish water deregulation in 2008 opened up the floodgates for non-domestic customers, allowing them to reap the benefits of a more mature, competitive market. It gave businesses the freedom to negotiate deals with numerous suppliers and achieve significant savings on their water and wastewater services. Eleven years on, businesses are now benefitting from savings that at times can be 30%, straight off the bottom line.

Before 2017, business customers in England also had to stay with their incumbent local supplier, but all that changed with the deregulation of the market which gave customers a choice to switch if they weren’t happy with their current supplier. Suppliers are now having to fight for their customers’ business.

As a result, new retailers have entered the market, with some challenging the more established companies to become some of the biggest retailers on the market. Previously public-owned water companies are having to think more commercially in order to remain competitive - many are still restructuring their business to make things seamless so, inevitably, some teething problems remain.

How can I make the switch?

Switching suppliers is quick and simple if your payments are up to date with your current supplier.

Here are our top tips on starting the switching process:

·         Consider your options - compare the prices of suppliers across the market to find the lowest available price for water and sewerage for your building. 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?

·         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.

·         Manage and track your water usage as this can impact on your quote.

·         Become water efficient by investing in automatic meter reading (AMR) and smart metering to control your data.

For more information on how Kinect Energy can help businesses maximise opportunities from the English open water market, contact us today on info@kinectenergy.com.