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Update On Water Deregulation UK 2017

Water deregulation UK 2017 saw the creation of the largest competitive water and wastewater retail market in the world, with over 1.2 million business customers in Wales and England eligible to use the service provider of their choice.

Water deregulation UK has now been in play for over a year. The Water Services Regulation Authority, Ofwat, conducted an assessment of the state of the business retail water
Market, taking an objective look at how customers have fared. This article contains some of the assessment’s findings related to the impact of water deregulation UK 2017.

The benefits of water deregulation UK 2017

  • Allows customers to shop around and find the best package suited to their needs.
  • Alllows customers to switch providers or renegotiate their contracts when they are dissatisfied with the service they receive.
  • Competition for business should encourage retailers to better serve their customers.
  • Retailers can encourage wholesalers to make efficiencies to benefit customers – such as developing customer service portals.

What we have seen since water deregulation UK 2017

  • Greater competition
  • More choice for customers
  • A growing number of retailers have entered the market
  • Smaller new entrants gained around a quarter of switches.
  • Five large customers have become self-supply retailer; this provided additional competitive pressure in the market, gives the customers greater control over their data and helps them save money.

How many customers have switched since water deregulation?

In the first year of water deregulation, about 10% have engaged in the new water market by considering switching, switching or renegotiating contracts. Only three per cent have switched or renegotiated, and around half of customers said they were uninterested in switching.

Higher water consumption and larger customers proved to be more likely to switch than lower consumptions or smaller customers.

  • 89% are aware of deregulation
  • 36% are active in the market compared to microbusinesses.

The main reasons behind switching water suppliers

  • Savings on price
  • Bill consolidation

The benefits of water deregulation

Ofwat say that opening the market has been beneficial both for customers who have switched and for those who haven’t. They estimate that:

  • Customers who switched or renegotiated in the first year saved around £8 million from lower bills.
  • Approximately 270 to 540 million litres of water were saved due to water efficiency measures from switching.
  • Two-fifths of customers who switched say that they saved money or noticed other benefits.
  • Water retailers have made improvements in billing and customer service – such as resolving legacy billing issues.

Challenges of water deregulation

Lack of awareness

Many customers are either not aware of their ability to choose a new retailer, or that they see few benefits in trying to shop around and switch. This is especially true of smaller customers, which may not experience high levels of saving due to lower volumes.

There has also been limited take-up of value-added services such as online portals and water efficiency services. Although there is customer appetite for these services, the industry will need to address other service issues before customers have the confidence to use them.

Operational issues

  • Billing issues
  • Accuracy of timeliness of meter readings
  • Resolving problems or complaints that are the responsibility of the wholesaler
  • Poor interaction between wholesalers and retailers

The UK government estimated that opening the market would deliver net benefits of around £7 million per year over 30 years and bring further environmental benefits. In order to maintain and reach this goal, the issues mentioned above will need to be addressed to instil greate customer confidence and engagement in the deregulated market.  

How can your business can benefit from water deregulation UK 2017?

Let Smarter Business do the legwork for you. We’ll take your water needs and consumption patterns into account to compare different water contracts and find you the best possible deal for your business.

Interested in saving on your business water? Let’s chat!