On April 1 2017 the non-domestic water market was deregulated, meaning that businesses, schools and charities can now choose their water supplier. The potential advantages are considerable and include significant cost savings plus the ability to make informed decisions on choosing the best supplier for your organisation.
Prior to deregulation most businesses in England were unable to switch their supplier and had no option other than use the local regional water company appointed to them. Effectively the water companies operated as regional monopolies, able to get away the kinds of business practices associated with such monopolies: uncompetitive pricing; unsatisfactory levels of customer service; and no interest in listening to their customers. Now over around 1.2 million businesses, schools and charities have the right to choose their water supplier; which is certain to be a big game changer.
Lower water bills and value added services
It pays to shop around: it’s estimated that businesses that do will be able to save up to 25% on their water bills. It is also likely that the resulting competition between suppliers will drive down prices even further leading to increased savings in the future. Of course, although cutting back on overheads is welcome, it isn’t the only consideration; the quality of service can also be crucial. Competition is likely to encourage suppliers to improve the way they work with and incentivise their businesses customers, for instance by providing improved value for money services in order to differentiate their businesses.
Prior to deregulation, businesses with multiple sites in different regions would have to deal with multiple water companies and handle each water account separately, substantially increasing the administrative burden. Now business can choose a single supplier for all their locations. Some businesses also had to deal with separate water companies for their water supply and wastewater services, again leading to increased admin. That can now all be corrected.
Reviewing your water tariffs
Is your business using the right tariff? If you have been using the same local supplier for an extended period, it is possible that you are being charged at the wrong tariff, perhaps you have been paying too much for your water for many years. Now that you are able to switch suppliers, it is an ideal opportunity to check that you have the right tariff. Any new supplier will be obliged to charge you only what you need to pay. If subsequently you discoverer you have been paying an incorrect tariff you should be able to obtain a refund from your previous supplier.
Scotland, Wales & Northern Ireland
Scotland deregulated the water supply market in 2008, becoming the first country in the world to do so. The long term result was that many more suppliers have entered the market. While Scottish Water is responsible for the infrastructure and remans the sole water wholesaler, other suppliers purchase water at wholesale prices and package water supply with other value added services. It’s estimated that since deregulation Scottish business have saved £65 million.
Currently there are no plans to deregulate the Welsh water market. Welsh Water (Dwr Cymru) is the sole supplier. Northern Ireland has also opted out of deregulation.
Short and long term impacts of deregulation
Based on what happened in Scotland, it could be some time before we see the full impact of deregulation on the water supply market. In Scotland further intervention by the regulator was necessary to increase retail margins, but now over 50% of businesses have switched their suppliers. In England we might see similar patterns emerge. Given that there are 1.2 million English organisations that are able to switch, the long term impact is likely to be huge.