Opening the Floodgates of the Water Market
1 April 2017 – not an April Fool’s joke, but the day of the most significant change in the UK water market since deregulation. For over a year now, organisations have been able to choose who supplies their water services, regardless of where they are located. Before April 2017, local water companies provided all water and wastewater services. But now, business customers are able to use their retailer of choice.
Although regional sewerage and water companies still provideservices, they now sell these services to intermediary retailers. These retailers buy water and wastewater from the wholesalers and package these with their own services for the consumer.
The benefits of an open water market
Businesses are now able to:
- Compare water services.
- Get services customised to meet individual customer needs.
- Negotiate better prices and services.
- Benefit from the retailer services such as billing, meter reading and specialist advice to help them understand, manage and reduce their water consumption.
The new regulation also allows for greater innovation, lessens water consumption, and leads to reduced environmental impact as a result.
One year in, how is the new water market performing?
The new energy market has seen established energy brokers align with water retailers to extend their scope of services. Despite the benefits to the business consumer, offering water services is not without its challenges.
From discussions with third party intermediaries (TPIs) about the new water market, Cornwall Insight has found data issues to be one of the most prominent themes.
Data issues TPIs experience include:
- Limited access to data.
- Poor data quality.
- Without access to quality data, TPIs find it challenging to get accurate quotes from retailers.
- Because many customers do not know who their Identifier (SPID) is, it’s not always easy for retailers to show it on bills (as per requirement).
- TPIs also don’t have access to the Central Market Operating System (CMOS).
- And even if they did, the CMOS has proven to be an incomplete database, with postcodes that don’t match, inaccurate SPID records, and more inaccuracies – this throws off retailer calculations when quoting a customer.
The water market has some catching up to do…
In 2016, the Competition and Markets Authority (CMA) undertook an investigation into the energy market. They ordered that price comparison websites must be given access to the meter point databases they need to quote customers accurately.
In the energy market, intermediation between supplier and end-customer is valued and well-recognised. But the water market has some catching up to do. By October 2017, only 2.3% of customers had switched suppliers. This indicates that many customers are not informed about the benefits of re-tendering water contracts and services.
Water market deregulation in 2020?
The Water Services Regulation Authority (Ofwat) is considering deregulating the water market in 2020. This would introduce consumer choice and competition in the domestic water market and would potentially restructure the entire regulated water industry.
As the water industry opens the proverbial floodgates even wider, there will be an even greater need to address the data issues currently inhibiting TPI services.