Deregulation of the non-domestic water market in England is set to take place in April 2017, following the example set by Scotland in 2008. But what are the reasons for deregulation, and what benefits could it bring for the business customers affected by the change?
The changes in brief
Back in 2008, Scotland saw its non-domestic water market open up; a move which meant that 130,000 businesses were given the choice to switch supplier. Scottish Water remained the sole Scottish wholesaler and retained complete control of the water infrastructure, whilst also creating B2B retail arm Business Stream. Alongside this, deregulation allowed several new retailers of various sizes to join the marketplace. These Licensed Providers now buy water services from Scottish Water, bundle this with their own services and added-value offerings, then sell the resulting packages on to Scotland’s businesses.
England’s own deregulation will see a similar thing happen. Currently a regional monopoly of more than twenty different companies, England will need to undergo administrative changes that are a little more complex in nature, but which will essentially mean the same thing: Whilst nothing changes about the water that reaches consumers or the infrastructure it passes through along the way, account provision and billing will be managed by a business’ Licensed Provider of choice.
Drivers for change
The water market situation in England currently means that, whilst some larger businesses (using more than 50 ML annually) may have the option to switch supplier, any other business that is unhappy with the way its water supply is being managed only has the option to file a complaint or withhold payment. Complaints can take time to have the desired effect and, unlike domestic customers, business customers can have their supply stopped in the event of a failure to pay. In short, dissatisfied business customers are relatively powerless to effect change.
Post deregulation, customers will be able to choose a provider that they know has a good reputation for customer service, who offers added-value packages that best suit their individual needs, or who can offer cost savings on their water supply. Those who do not live up to their customer’s expectations will lose business to competitors that do a better job. Better customer service is the most significant change which has been seen in the deregulated Scottish marketplace, and the same can be expected below the border.
In addition to improved service, DEFRA have championed deregulation as one way to encourage innovation and efficiency from water companies; important measures needed to counteract the extra strain placed on England’s water services by a growing population and changing climate. A compelling argument indeed for pursuing deregulation despite the necessary upheaval.
Although the possible benefits seem significant, Wales has opted out of deregulation and will continue to operate as a monopoly under Dwr Cymru (Welsh Water). Northern Ireland will also remain unaffected. In England, the changes which begin with deregulation may take a while to gather pace, but can certainly be looked forward to as a positive opportunity. All business customers will be able to demand more from their water supplier, just as they would with their gas or electricity supplier. For businesses with multiple sites based in England and Scotland, or both, 2017 will also bring a valuable opportunity to consolidate water supplies across their portfolio, simplifying management of their water account and saving valuable time and money.
The time to start preparing for deregulation is now, as cleansed and verified data will allow for the most effective tendering process. For businesses who want to make the most of the changes, knowledge is most certainly power.