24 Sep Water deregulation: time to shop around?
April 2017 marked the deregulation of the commercial UK water and wastewater markets. Despite this unprecedented opportunity, many SMEs, schools and care homes are unaware of the benefits their organisations could gain by switching supplier and becoming more active in the market.
Breaking the chain
When deregulation happened, there were over a million businesses, charities and public organisations in England that stood to benefit. Now these firms would no longer be tethered to their water supplier or wastewater disposal service by geography.
Crucially, this introduced open competition to the water markets. Inevitably imposing greater accountability on the part of suppliers to provide an efficient, cost-effective service.
Matching other open utility markets, electricity and gas for example, retail suppliers buy a service like water supply or wastewater removal wholesale and then offer a package to commercial consumers. The domestic supply market remains closed and so domestic consumers are unable to switch from their local supplier.
One year on however, the Consumer Council for Water (CCW) made some uncomfortable discoveries concerning the engagement of SME’s. According to a survey conducted that year, less than 38% of businesses knew that switching suppliers was an option.
However, those that were aware quickly took advantage of their newfound freedom with 24% of in-the-know SMEs switching supplier within the first two years and 31% able to improve their current supply rate through better-informed negotiation.
A rising tide
Deregulation of the water market has been hugely empowering for business consumers, particularly SMEs who would usually be unable to leverage better deals from suppliers by virtue of their size alone.
Mimicking the electricity and gas market, they can choose a provider based on their own priorities for the first time.
The newly competitive market means that commercial water customers now have a variety of potential suppliers to choose from. The threat of customers switching has made their experience the focus of water supply services.
In the first year of water deregulation, 40% of business consumers who had switched reported either financial savings or other indirect benefits. Common among these secondary benefits was a push towards greater efficiency in water use. Unsurprising given the increasing conscientiousness around its financial impact.
The number of retailers entering the market has also increased since 2017; these new contenders captured 25% of all switches throughout 2018. In a handful of cases, firms have become their own retail suppliers in a bid for self-sustainability – and increased the pressure for good customer service as a result.
Due to this trend, a chain reaction has occurred where retailers are now encouraging suppliers to improve their efficiency on behalf of customers.
The Dangers of deregulation
However, the open market is not without its challenges, any removal of restriction trades simplicity for freedom. The complexities of water deregulation can often trip up business leaders due to the considerations in sourcing a water supply that is both competitively priced and customer-focused.
The water market differs from its counterparts in gas and electricity in that billing formats vary between suppliers. Water retail also suffers from an excess of variety regarding added charges and how those are calculated.
Anyone responsible for these negotiations needs a firm grasp of different tariff charges based on various locations around the country. Without this background knowledge, it becomes nigh impossible to effectively shop for a package that suits their needs.
Additionally it means that billing mistakes made by suppliers can often go unnoticed. The continued invoicing of sites that they no longer supply is a common complaint – leading to customers paying more than they owe.
We have estimated that almost 1 in 5 of all utility invoices are subject to error. That is why our utilities audit always includes comparative analysis that we weigh against historic consumption trends.
In order to overcome the discrepancy between the bills lay outs of differing suppliers, we will always try to secure both water consumption and wastewater management from a single supplier on your behalf. This ensures billing consistency and to guarantee a positive experience ESS only uses a handful of trusted suppliers.
Alongside procurement, we also offer an invoice validation service to protect you from avoidable costs. Since manual readings mean disparate billing dates – often months at a time – organisations can accidentally accrue large debt. This is simply because they were unaware that their consumption had strayed outside of supplier estimates.
Another contributor to this is the often-remote location of metres that can mean readings are effected by blocked signal. We can arrange AMR (Smart metre) installations to combat this problem; however, we appreciate that this may not be financially viable. Especially so in the case of SMEs only expecting minor savings. As such, our invoice validation also includes reminders to both customers and suppliers when readings are due to prevent costly data gaps.
ESS have been providing water billing and management services for over 20 years. Our clients are based in a variety of sectors including education and healthcare as well as commercial SMEs. For a full breakdown of our services visit our solutions page.