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Water Deregulation: News Roundup

As water deregulation in England draws ever closer, industry preparations mean large scale changes for some, and internal reshuffles for others. Opportunities exist for incumbent water suppliers and new entrants alike, as well as for the business consumer; for whom the arrival of competition in April 2017 will mean improved pricing and raised customer service levels.

So, to get you up to speed with the changes that are afoot, here’s a look at what’s been happening recently in the English water marketplace…

Scotland’s water companies seek entry to English open market

Clear Business Water is currently Scotland’s second largest water retailer. Now CBW has its sights set on a presence in the deregulated English market place, having applied to Ofwat for a licence which would allow it to participate in the English non-domestic market from April 2017.

This follows hot on the heels of a similar application from Scottish company Castle Water; currently the largest independent supplier operating in England having bought the customer base of Portsmouth water, who recently announced their decision to exit the market. Castle Water already serves more than 20,000 customers across England and Scotland and the company has made it clear that it would consider buying the customers of other English companies wishing to exit the market place in the run up to deregulation next year. Other Scottish suppliers, including Scottish Water subsidiary Business Stream and new entrant Everflow, have also expressed their intention to carve themselves a place in the new market when it opens. For business consumers operating sites across both countries, the availability of water retailers providing services to both the Scottish and English markets can only be good news – signalling a new era of reduced administrative effort and consolidated billing on their water accounts.

Rebrands and joint ventures characteristic of the changing market place

Since Severn Trent Water and United Utilities announced their intention to join forces back in March, there have been a host of other announcements, including restructures, new appointments, and rebranding, from water companies keen to prepare themselves for the deregulated marketplace.

Most notably so far, Bournemouth and South West Water (SWW) have created a legally separate company, named Pennon Water Services, which will operate on behalf of South West Water Business Services, Bournemouth Water Business Services, Source for Business, Aquacare and Avon Valley. The company will be based in Bournemouth. This follows the transfer of Bournemouth Water into SWW, so that the two now operate under a single license, although retaining the Bournemouth Water name.

Northumbrian Water has also announced the rebrand of its business retail arm, under the name ‘Wave’. The company have entrusted the leadership of Wave to Managing Director Lucy Darch, who has stressed the need for flexibility and versatility, saying, “I am a believer that to be successful all our decisions need to work towards providing great value and customer experience.”

Customer satisfaction is at the heart of the policy which has led to deregulation, and will provide the primary challenge for those looking to develop a retail function. The majority of water companies have already made explicit their intentions to remain in the marketplace, or exit in advance of the market opening. Details of their plans  will need to be submitted to Ofwat before the deadline this October 2016. For the moment, only South East Water and Cambridge/South Staffordshire Water are refusing to comment, whilst Southern Water has expressed that it is undecided.

MOSL miss milestone, but insists that market will open on time

Market Operator Services Ltd (MOSL) have responsibility for finalising and base-lining the documents that will underpin the new open market; procuring, building and testing market IT systems; and establishing market readiness and company engagement. Phase one development of their new Central Market Operating System (CMOS) was due to conclude on 4 April. However, this date has slipped due to unforeseen issues, and user-acceptance testing will therefore also be delayed. Despite this delay in delivering a fully SIT tested CMOS system to market participants, MOSL insist that the market will not be prevented from opening on time. They have escalated operations in this area to ‘red’ to, “secure the appropriate management focus and response” and have written to CGI, who are building the systems, to express the need for increased confidence in a revised completion date. For business consumers, the message is clear: don’t wait to start making your own preparations for deregulation.

We’ll continue to keep our eyes on the marketplace and keep you updated with the most pertinent information, but if you’re concerned about the changes, and want to find out more about getting prepared for deregulation, expert help is available.