Special Report - news
Stay ahead of the tide of water deregulation
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pril 2017 brings with it the biggest reformation of the water industry in living memory. Currently, non-domestic users are only able to use their local supplier for all of their water needs, irrespective of the level of service they are receiving. Post April the water market will become deregulated, allowing businesses, charities and public sector organisations the freedom to select the water supplier that best fits their needs. Whilst this change has been on the cards for a long time, Richard Roberts, Account Manager at IMServ Europe Limited, believes that some businesses are making the mistake of waiting until the deadline before securing their new water contract. By seeking timely advice now, companies can secure the best deal available to them, before the big rush to make the switch next year. “We’ve seen the success of water deregulation in Scotland already, with some companies reporting savings of up to 30% on their water bills,” commented Richard. “However, some companies are lagging behind their competition and holding back
on signing on the dotted line. These businesses may find themselves scrabbling for a favourable deal come April and accepting a contract which is not necessarily the best fit for them.” In order to prepare businesses and suppliers alike, Market Operator Service Limited (MOSL) is running a ‘Shadow Market’ in the run up to deregulation in April. MOSL’s role is to deliver the operational capabilities required to support the running of the deregulated market. The Shadow Market is a transition phase and will simulate live services to allow systems, processes and data collection to be trialled without commercial risk. Deregulation is coming regardless of whether companies actively choose to take part in the Shadow Market or not. Companies that don’t prepare, or choose not to review their water supplier, may find themselves automatically migrated onto a service which is unsuitable for their business. Additionally, as some operators are leaving the market altogether, some businesses may find that they are passed onto a service provider not of their choosing. IMServ, one of the UK’s largest energy and data management providers, has been offering water efficiency services as part of
its portfolio for some time. It has been encouraging its customers to make the most of the Shadow Market, so that they can test the systems and processes which will come into force with deregulation. Richard continued: “Although it is still too early to determine the long-term success that water deregulation will have on the UK market, the Shadow Market is off to a promising start. The true benefit that businesses are reaping by taking part is the freedom to test out processes and systems without commercial consequences. Water companies are able to trial how meter readings will work, experiment with tariff changes and switch suppliers, but no money will be transferred during this period as contracts will not commence until April 2017.” “Although April may feel like it’s just around the corner, there is still plenty of time for those offering water services to ensure their customers experience smooth sailing during the switch. Ultimately, the Shadow Market is a chance for the main participants to reassure themselves that the UK water market is prepared for this change, has looked at the effect that deregulation has had on the Scottish market and taken learnings from the process”. www.imserv.com
Ofwat sets out plans for monitoring the business retail water market
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fwat has warned it would be closely watching water retailers when the market opens for 1.2 million business, charity and public sector organisations. And it will not hesitate to take action right from the start if it sees misconduct. From April this year, eligible business customers in England will be able to choose who they pay for their water and wastewater retail services The UK Government has estimated the market will contribute around £200 million to the UK economy and to bring significant environmental benefits. However, these benefits will be achieved only if the market is truly competitive and efficient, with all retailers giving clear advice to customers about the opportunities to switch tariffs or suppliers. Having learnt from experiences of other regulated markets, the energy and financial markets in particular, Ofwat has applied them to its monitoring and intervention approach.
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Ofwat senior director Richard Khaldi says: “Introducing choice for businesses, charities and public sector organisations is the biggest change to the water sector since its privatisation more than 25 years ago. This will create the biggest competitive water market in the world. “We want to ensure this market operates well and protection is in place to build customer trust and confidence. And we will not hesitate to take action right from the start if we see customers being missold or mislead. “The new market offers opportunities to help you get a better deal as a customer, such as combining multiple sites into one electronic water bill or having a combined utilities provider, potentially saving money and time. If you are a small to medium sized enterprise (SME) or high street business, you can benchmark what other companies and businesses of your size in your sector are doing, which could help you save money and also save water, which is great for the environment.
Energy Manager Magazine • january/february 2017
“But with opportunity there are risks, which is why we want to ensure all customers have choice and know how to exercise that choice, so they can make informed and considered decisions.” Ofwat plans to get a full picture of the new market by using several different methods including water retail company reports, the experience of customers and water retailers, any complaints it receives, market research and proactive checks. It will consider intervening where there is a risk to the effective operation of the market or where there may be significant detriment to customers. Ofwat is now asking for people to have a say on the consultation it has launched about how it monitors the market and ensure customers are protected. The consultation closes on 10 February. You can read the consultation on our website and give your feedback via email to marketmonitoringconsultation@ ofwat.gsi.gov.uk