Britain’s new water market is flooding the old cartels with fresh competition

 
Cathryn Ross
Outback Australia in drought
Business customers are starting to see that it can be worth their while to jump into the new market (Source: Getty)

In April, the biggest shakeup to the water industry since privatisation gave businesses in England access the world’s largest retail water market.

For the first time, businesses now have the power to pick and choose where they buy their water.

Last week saw the first release of data about this new market. It showed that in the first three months there were more than 36,000 switches.

Read more: The UK's water market is now open for competition

While this represents a small proportion of UK businesses, it shows how customers are beginning to find the right deals for them and that the idea of a retail market for water is sound.

That said, it is worth noting that switching is just one measure of the market. So, 12 weeks in and as the market is finding its feet, what else have we learned from these early days?

First, it’s clear that business customers are starting to see that it can be worth their while to jump into the new market.

On top of an average of 12,000 switches a month, thousands of other businesses have renegotiated with their current retailer, saving money and water, and getting a service that better suits their needs.

Some heavy water users have saved tens of thousands of pounds. But we’ve learned that this market isn’t just about the big players. Around 60 per cent of switches came from organisations that don’t use much water. That is an encouraging sign that this market can offer something for all businesses, large or small.

We’ve seen that innovation is possible, with new technology available to tackle leaks, convenient fresh approaches to billing, and water audits that show customers how they can save water. Without competition, we doubt that this would have happened.

There has also been interest from new retailers (and so new investors, too) with 10 additional entrants coming in to compete in the market.

Another initiative causing a buzz is self-supply. This means a business can become a water retailer with the ambition of only ever having one customer: themselves. In doing so, they reduce administration costs, cut out the margin that goes to others in the supply chain, and have more control over the service they get.

Greene King has become the first self-supplier, but they won’t be the last. We’ve seen lots of interest from other well-known companies wanting to explore this option.

This is a good start, but there is more to do to get the water market into top gear. For a start, customers want better clarity on price and service improvements. They want more help to save money and water, and for it to be easier to compare deals.

To deliver this, retailers will have to up their game. If they don’t, they’ll be pushed out of the way by new competitors who are better at responding to customer demands.

We’ve seen green shoots emerge in the early weeks of this market and customers are already starting to reap the rewards. But they are not yet fully satisfied and so, as the regulator, neither are we.

The aim is to achieve a market where customers can shop around for the right deal, as easily as they would for any other service they buy. We’re not there yet, but the progress we’ve already seen shows that a fair, transparent and competitive water market is becoming a reality.

Read more: The water industry responds to Labour's nationalisation policy

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles