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England’s open water market – we’re almost there!

As the Christmas season approaches and the end of the year looms ever closer, the water industry will be counting down to market opening. Set to take place on 1st April 2017, the new competitive marketplace will give all non-domestic water customers the opportunity to choose their preferred provider.

It’s been a busy year for the sector as water suppliers gear up for this impending tide of change. For those opting to go forth into non-domestic retail, 2016 has been a time to better understand customer needs, create the right service infrastructure and determine their new propositions to market. For those following the wholesale only-route, and therefore exiting the marketplace, the focus has been on making the necessary commercial arrangements to ensure their non-domestic customers transition seamlessly to their new default retailer. The deadline for water suppliers to express their intentions on whether they wished to exit or remain was October, meaning that many customers should now who their water accounts will be with in the run up to market opening.

New brand names

It’s been a fascinating time for the market, with a number of new players making  an entrance, and Ofwat predicting as many as 40 new applications for retail licences in the run up to April. Mergers and acquisitions have featured heavily within the sector, making keeping up to date with the latest movements almost a full-time job!

So how will this work in practice? Let’s use the merger of South Staffordshire Water and Pennon Water as an example. From April 2017, all activities will be conducted under three brand names: South Staffordshire and Pennon will be retained in their existing footprint, whilst the combined company will be known as Source for Business out of area. Together, the business is set to become the fourth largest retailer, with approximately 8% of the non-domestic market share. The drivers behind the merger have been cited as economies of scale and a desire to provide great customer service.

A rise in multi-utility offerings

The parallels between water and energy purchasing under the new arrangements are evident. With a greater number of suppliers to choose from, businesses can expect to benefit from cost savings and added-value packages. Arguably though, the biggest advantage is likely to be administrative, with the open market giving rise to consolidation of billing, contractual arrangements and customer service provision across a company’s full portfolio of sites. We should expect an influx of multi-utility propositions as we head into the Spring, which may well open up further the opportunity to consolidate and align utility purchasing.

Getting ready

As your business prepares for water deregulation, it’s important to have a clear idea of what you’re really looking for from your water provider. For instance, manufacturers might prioritise the ability to draw on expertise that helps them improve processes and reduce waste, whereas a retailer might be more interested in timely and accurate billing. Whilst it’s unlikely that providers will choose to specialise by sector from April, they will undoubtedly look to create differentiated packages – so it’s worth identifying those elements that are most crucial for your needs and shopping around accordingly.

The most practical step you can take now is to make sure you have a detailed understanding of your water portfolio. A specialist water audit is a great place to start to make sure you have a clear set of data which can be used within any tender processes when the market deregulates.