Businesses in the dark about water retail competition, survey reveals

Two-thirds of organisations remain unaware of imminent changes to the water market which will allow all non-domestic water users in England to switch suppliers of their water retail services.

That’s according to a new survey carried out by market regulator Ofwat, which is overseeing the launch of water retail competition in April. It reveals that just 32% of firms are aware about the forthcoming changes, with the remaining 68% having not heard about them at all.

Those in the construction, retail, financial & insurance and public administration & defence sectors are significantly less likely to be aware of the upcoming changes according to the survey, which questioned 1,000 organisations of all sizes across England.

“Eligible customers – whether they are a hospital, local council, florist, factory or farmer – can, for the first time, choose the water services supplier to suit their needs,” said Ofwat chief executive Cathryn Ross. 

“This is a real opportunity for these customers, but first they need to know more about the new market. Then they can use that knowledge to make an informed choice. It’s for these reasons Ofwat is working with partners and the water sector to launch an important awareness campaign next week.”

Scottish success

Water retail services refer to all customer-facing activities such as selling the water, billing customers for it, and dealing with any related enquiries. This is distinct from the ‘wholesale’ activities which cover everything up to the meter such as sourcing, transporting and treating water and wastewater.

Competition for water retail competition is due to commence in England on 1 April 2017. In practice, this means that around 1.2 million businesses, charities and public-sector organisations across the country – no matter their size or level of water consumption – will be able to choose their provider of water and wastewater retail services, as they are for their energy supply.

Much of the structure and processes of England’s competitive water retail market will replicate those seen in Scotland, where the 2008 introduction of non-domestic retail competition has broadly been a success. The Department for Environment, Food and Rural Affairs (Defra) – which is working with Ofwat to oversee the delivery of water retail competition in England – expects water retail competition to deliver around £200m in benefits for the UK economy.

To be eligible to switch supplier, an organisation must operate from a business premises, pay business rates, and not use a household water supply. From Ofwat’s survey, it can be estimated that just over half (53%) of all organisations in England will be eligible to switch water retail services. This reflects the fact that most organisations in the overall population are micro businesses, about half of which are eligible (51%).

‘Right direction’

Whether or not eligible organisations will actually switch come market opening is another question: more than half (52%) of organisations surveyed by Ofwat said they would consider switching who supplies their water retail services when the market opens, with financial savings cited as the top influencing factor for switching. Around a quarter of respondents (26%) said they are unsure whether they will switch or not, while the remaining fifth (21%) said they would not consider switching.

Commenting on the survey’s findings, Tony Smith, chief executive of customer representative the Consumer Council for Water, said: “Awareness of the new non-household retail water market appears to be heading in the right direction, having been as low as 8% almost a year ago when we carried out our own customer research – that has now risen to one-third of customers.”

“But the job is not done, with two-thirds of eligible customers still oblivious to the changes and at risk of missing out on the potential benefits. With less than three months to go, our challenge to the industry is to ensure the majority of customers in England know about the new market. We want to see a vibrant marketplace where customers are well-informed about the choices they can make.”

edie explains: Water retail competition

Organisations across the country now have access to a free, in-depth ‘edie explains’ guide to water retail competition, which is set to come into effect in England this April and will impact all non-domestic water users.

The new edie explains: Water retail competition guide, produced in partnership with Utility Week, provides an in-depth summary of the government-led strategy which will allow all non-domestic water users to switch suppliers of water retail services.


Luke Nicholls

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