Last week, Ofwat opened the application process for companies wishing to enter the new open water market as retailers. With deregulation only 12 months away, companies are already preparing for the changes, and are expected to declare their plans no later than October 2016.
So, what will the application process look like and what will it mean to your business? Here is our quick guide to the changes, with a look at how you can prepare for deregulation now – to be sure that your business is ready to benefit when deregulation arrives in April 2017.
Companies wishing to act as retailers in post deregulation England will require a thorough understanding of the new market arrangements and must be able to identify the part or parts of England that they wish to operate in. This could mean more retailers entering the market – and for major water users, could also mean a change to business models: in the deregulated marketplace, it will be possible for some eligible customers, such as large supermarkets and hotel chains, to act as water retailer to their own sites. They would not, however, be able to retail to anybody else.
Potential retailers will need to lay out their plans on the online application form which Ofwat have provided, and also pay a fee of £5,250. Once submitted, these application details will be displayed on the Ofwat website for 20 working days to comply with the public consultation requirement. When the consultation period comes to an end, Ofwat will undertake a detailed assessment of each application – a process which could take a further two months.
An estimated 1.2 million companies will be affected by this new wave of deregulation in England. Whilst there will be no change to the water supply infrastructure, and the water which reaches your premises will come from the same source, all non-domestic customers will be able to choose the company who handles their billing, meter reading, and customer services. Companies who would like to provide these services to business users will need to apply for a water supply licence (WSL) or a water and sewerage supply licence (WSSL).
We can expect to see various changes over the coming months, as water companies formulate their plans and reassess their business models to meet the new demands of retail. Whilst some companies may merge, and others restructure, some will choose to exit the non-domestic retail market altogether. One example of this is Portsmouth Water, who were the first company to publicly announce that they do not wish to compete in the new open marketplace next year. Companies who make the decision to exit the market will be expected to gain approval for their withdrawal from the Government. They will also be required to outline their future plans, including the provision of a default alternative service provider for current customers.
Find out what your water supplier is planning to do here.
While water companies are preparing for deregulation, it makes sense for business customers to be making their own preparations. For businesses of all sizes, deregulation is an opportunity which should not be wasted. As Scotland’s earlier example of a deregulated marketplace proves, the customer benefits could be significant; both in terms of potential cost savings and in terms of value-added supply contracts.
The decision to switch supplier will depend upon your individual needs and circumstances, and the first step towards making this decision effectively will be a health-check of your current supply accounts. It will also help to have thorough understanding of the way in which your business uses water. Both can be achieved through a professional water audit, which can also benchmark your business against a “league-table” of comparable businesses.
If your business is thinking about switching, or is affected by a water supplier exiting the market, expert help and free water audits are available.