36,000 businesses have switched water retailer since market competition opened

More than 36,000 businesses have switched water retailer since the market opened to competition earlier this year, with around 60% of those switches coming from low-water-users.

Ofwat has seen

Ofwat has seen "encouraging signs" from the new water retail market, with business customers saving money and water

Market operator MOSL has today (3 August) released switching data for the first quarter of 2017/18. The figures reveal that 36,301 supply points have switched so far. This represents approximately 1.4% of the 2.6 million supply points that make up the overall market.

At the end of the first quarter, there were 25 wholesalers and 35 retailers in the market. Of these 22 were national, 12 were regional and one – brewer Greene King – was a self-supply retailer.

Cathryn Ross, chief executive of the water regulator Ofwat, pointed out that around 60% of switches have come from low-water-users, which she suggested are more likely to be SMEs. “That is significant,” she said, “because we want to make sure this market works for all customers, not just the very large companies with specialist procurement divisions. In addition to those who have switched, we have heard that many others have agreed new deals with their current retailer.”

However, Ross added that “more can be done”. “Comparing offers is still not as easy as it needs to be and we have told retailers they must remedy this," she said. "We will continue to monitor the market closely to make sure it works for all and continue to meet and listen to customers, whose views will shape our work.”

Not everyone is satisfied with the number of switches seen so far. Lord Rupert Redesdale, chief executive of new entrant The Water Retail Company, told edie’s sister title Utility Week that 36,000 “is not success”, and that a lack of awareness among business customers may be “holding the market back”.

Source: Market Operator Services Limited, CEO quarterly market review, 03/08/2017, market charts

Meanwhile, the Consumer Council for Water (CCWater) has released new data on the number of contacts it has received from business customers in the three months from March to June.

The group revealed that it has received 370 complaints from businesses since the market opened, compared with 232 received in the same period the previous year. This rise is “in line with the consumer group’s expectations”, with many of the complaints relating to “teething problems” which CCWater expects to be “swiftly resolved” as the market develops.

Of the complaints, 54% were to do with billing and charges, which CCWater said is consistent with previous years.

Competition has also generated some new types of complaints, with a small number of businesses encountering difficulties finding information about retailers and their tariffs.

There were also some delays in resolving operational issues, including low-water-pressure and leaks, caused by poor communication between retailers and wholesalers. And CCWater intervened to help some household customers who were wrongly classified as being eligible for the non-household market.

However, CCWater chief executive Tony Smith said there is “little to suggest” that customers have so far encountered any major problems with switching or the services they receive from retailers.

The water watchdog said it also received six times more enquiries from non-household customers during the first quarter of 2017/18, compared to the same period last year. Small- and medium-sized businesses accounted for more than 90% of these contacts.

Source: Consumer Council for Water

Last month, Utilitywise chief executive Brendan Flattery wrote to Environment Secretary Michael Gove, urging him to “put the customer first and make the water market truly open and honest”, after research found that just one in four small businesses feel informed about the impact of water market deregulation on their business. Flattery insisted that the low switching numbers seen so far suggest that market liberalisation has “gone off the boil”.

Before the water market opened, edie published a guide to explain the changes, and the benefits and implications that the market is expected bring. The edie explains: Water retail competition guide, produced in partnership with edie's sister title 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.

--- READ THE EDIE EXPLAINS: WATER RETAIL COMPETITION GUIDE HERE ---

To coincide with the market opening, edie's publisher Faversham House also launched a brand new publication – Water.Retail – under the auspices of Utility Week. This fortnightly, high-value, newsletter-style publication connects brokers to wholesalers, retailers and customers, and provides water retail professionals with high-value business intelligence and market insights. Sign up to Water.Retail now and get a free trial subscription.

Lois Vallely, Utility Week


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