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In 2008, Scotland became the first country in the world with a deregulated water market. Since then, the country has boasted about a number of significant improvements including in water delivery, in customer service and in generating efficiencies – just like in other deregulated markets like gas and electricity. While larger English business customers (using more than 5 mega litres at any one site) have enjoyed a degree of choice about their supply some time, in 2017 the whole business market will be opened up in England (but not Wales).  

Why water deregulation is a good thing for businesses

Fundamentally, the argument for deregulation centres on introducing more competition into the water market. The water market in England has mostly operated as a series of regional monopolies like Thames Water, Yorkshire Water and Northumbrian Water. By introducing more competition into the marketplace you increase the incentives for suppliers to reduce costs or provide a better service. Ultimately, this will lead to more benefits for consumers. The evidence for this in Scotland is compelling. Business Stream point to a list of improvements which emerged over the first five years of water deregulation. These include:

• Achieving more than £35 million in water efficiency savings
• Reaching a 26% increase in customer satisfaction
• Making £30m worth of discounts available to customers
• Saving public sector customers more than £20m in three years

In addition, businesses which operate across multiple sites and different regions can simply deal with one supplier instead of lots of separate ones. And if they have a particular problem or disagreement with one supplier, businesses have more power of recourse to switch away.

Some criticism

Some critics point out that past market deregulation in England hasn’t been completely successful. Over 15 years of energy market deregulation to 2014, some 37% of electricity customers and 40% of gas customers still hadn’t switched from their 'pre-deregulation' supplier. Another criticism is that the oligopolistic ‘big-6’ dominated energy market still isn’t perfect. However, these criticisms only ring true for household consumers, not non-domestic business customers. Business customers are more sensitive to switching suppliers if they can get a better deal. What’s more, business customers are also more likely to use some of the smaller suppliers who can often deliver utilities at better rates than the bigger companies.

Putting consumers first

Customers in Scotland have already received a better deal as a direct result of deregulation and more competition. Now the Water Bill will also put business customers in England at the heart of the water sector.

Industry changes ahead

When full UK deregulation hits in 2017, businesses in England will get the same power as Scottish businesses to choose who supplies them with water, waste water and drainage services. This more competitive marketplace has not fully evolved yet, but as the deadline creeps closer it’s clear that some changes are on the way. Competent wholesalers should emerge and be capable of contracting with retailers quickly, transparently and fairly. If they fail to do this then buyers will look elsewhere. In England there are 21 wholesalers and around a million customers. Each company will have to define how it wants to operate in this new marketplace and in particular, it will have to define its approach to retail. For more information on changes to the water market, or to learn how industry changes might impact your business, call one of our trusted advisors. Utility Helpline will help your business get prepared. Call: 0800 043 0423.