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Energy


Uncharted waters for businesses as deregulation arrives


By Carl Perry, Water Switch UK Ltd


T


he water retail market in England and Wales is expected to go through a period of significant


change as the industry moves ever closer to full deregulation in April 2017 for non-domestic consumers. This is a regulatory change that will impact on all businesses and organisations, giving them the opportunity to switch their clean water and wastewater services from this date or remain with existing providers, to take advantage of significant lower costs with the expectation of improved service. Currently, some businesses and organisations in England and Wales are able to benefit from the water competition since the introduction of the initial Water Act for the water retailers in 2003. However, few have opted to benefit from this piece of regulation, as many haven’t heard of, or haven’t had time to research and fully understand it as there are various constraints on eligibility such as the often quoted minimum annual usage of 5 mega litres (5000m3


).


So what is deregulation and why is it happening? The UK Government has decided to open the water industry up to competition in an attempt to stimulate innovation, improve service provisions, and to help drive a sustainable approach to our scarce water resource. Deregulation is a model that has been successfully implemented before, within the energy industry. Over the past 16 years of energy market deregulation, there has


been extensive activity with the majority of gas and electric customers switching suppliers. So there are lessons to be learnt and much can be gained from comparing the water sector with the energy industry. Scotland deregulated for both water and wastewater services in 2008 for non- domestic customers – the first country in the world to do so. After taking this step, Scotland has witnessed an increase in service and customer satisfaction, with competitive activity rising. As a result of this approximately 50% of customers have either switched or renegotiated their water and sewerage services. When full deregulation comes into effect in England in 2017 business customers and organisations will have a similar opportunity to switch suppliers like those in Scotland.


Why is water deregulation a good thing for businesses? Fundamentally, the argument for deregulation centres on introducing more competition into the market place. The water market in England has historically been operated as a series of regional monopolies limiting customer’s freedom of choice. Recent research on behalf of the Consumer Council for Water has found that while most are satisfied with their current supplier, there is a perceived lack of innovation and active account management. Although most businesses are now familiar with the process and benefits of switching – energy, insurances and telecoms are prime examples – the inertia in the water market has resulted in a lack of focus on water costs, such that businesses are unsure how to approach the new market, and concerned how much time and effort will be required. Introducing more competition into the


market helps increase existing service levels and significantly reduce costs. Overall, this will lead to more benefits for the consumer and the evidence for this in Scotland is compelling. Existing suppliers such as Business


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