In April next year the non-domestic water sector in England will open up to greater competition, which should bring more choice for you as a business customer as well as innovation from market players.
But as with any significant change, there is opportunity and risk. Those business which are well prepared could find they are able to make significant savings and demand a better service from their supplier. In this article, Mike Jones, MD at IEC, explains the changes.
Why deregulate the water market?
While water supply was deregulated in Scotland in 2008, in England, only larger businesses currently have the option to switch water supplier. Smaller customers who are unhappy with their service are able to exercise pressure on their supplier only by making a complaint or negotiating on payment terms. However, because supply can be ceased in the event of a failure to pay this means businesses, in effect, have limited ways in which to influence their supplier.
Once the water market is deregulated, more suppliers can enter the market. This will mean that businesses are able to opt for a supplier who creates a water provision package which is suitable to their needs, along with a good service and the potential for cost savings.
When will deregulation begin?
In April 2017. It should be noted that the changes will not affect Wales or Northern Ireland.
Will deregulation mean cheaper water for your business?
If the Scottish example is anything to go by, it takes time for cost savings to filter through the system. Initial estimates are that companies are likely to save 2 – 5% by switching supplier when deregulation is first introduced. In Scotland, discounts are currently up in the region of 25%, but it has been a slow and steady journey to this point. Some experts are speculating that both Scotland and England will eventually see discounts settle at around 10 – 15%, but no-one really knows for sure.
Businesses with sites in both England and Scotland will be able to consolidate their water supply. This will reduce the administrative burden and hopefully result in cost savings.
What about quality of service?
Because deregulation will lead to a competitive marketplace it is hoped that deregulation will lead to an improved service from water suppliers. Water suppliers will be able to create their own service packages based on customer needs, so businesses will be able to opt for the supplier which best suits them.
How should you prepare for deregulation?
Water deregulation is certainly an opportunity to review your water usage and costs and ensure you are with the right supplier.
First of all, it’s a good idea to begin with a thorough water audit, ensuring you fully understand how your business uses water and where the costs are. This will enable you to rectify any issues with your current supplier. It will also help you to understand where and how your business uses water – gathering data about trends will help you to identify areas where efficiencies could be made.
Secondly, we would advise you to establish your needs. You’ll get the most out of your new water supplier if you have a thorough understanding of your company’s requirements. Use the information gathered in your water audit to determine what you need from your water supplier now and in the future so that you can negotiate the best package in a deregulated marketplace.
Next steps
We will do our best to help ensure you stay up-to-date as water deregulation approaches. If you need further information or would like to discuss how we can help you manage your water costs more effectively, please get in touch.
