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Business water switching rates – just a drop in the ocean?

When the non-domestic water market opened earlier in the year, it was one of the biggest changes the industry has seen since it was privatised decades earlier. Last week was the first time MOSL has released data about the status of the new market – so what’s been happening since April?

Are businesses switching suppliers?

More than 36,000 supply points have switched water retailer since the market opened on 1st April 2017. This figure has been met with mixed reactions from the industry, as some have pointed out that of the 2.6 million supply points in the market, only 1.4% of the market has switched so far. There have also been claims that this figure is inflated, with some saying that MOSL’s data reflects switch requests rather than completed switches.

Which businesses are more likely to have switched? It seems that low water users – businesses that use less than 1,000 litres of water a day – make up around 60% of all switches. However, this is still only around 1% of the total low water user market, whereas around 4% of the largest water consumers (those that use over 13,700 litres of water per day) have switched.

It certainly seems that awareness of the changes in the market is higher among large businesses, as a survey carried out by the Major Energy User’s Council (MEUC) revealed that 26 percent of their members have switched or are in the process of switching. It’s worth noting that switching isn’t the only way that businesses can benefit either – many businesses have renegotiated their contract with their existing supplier.

A successful start?

As can be expected with any new market, business customers have experienced both positive and negative outcomes from open water so far. Those that have switched or renegotiated the terms of their contract may notice a small reduction in their water costs, although we don’t expect discounts to be any higher than around 2-4% until the next pricing round. However, if businesses are given support with water efficiency then they could see a more significant fall in their water bills.

Increased competition in the market ultimately gives businesses more options, meaning that every business should be able to find a water supplier that meets their needs. There are 10 new entrants in the market, and businesses can also choose to self-supply if they wish. While Greene King is currently the only business to have become a self-supplier, a number of other organisations are rumoured to be considering this route.

While many businesses will be feeling the benefits of switching, there have been some initial challenges for suppliers. The MEUC’s survey also found that 42% of businesses had a good experience of switching, a significant number (28%) of their members described the switching process as ‘not good’.  This could be caused by problems with the data in the central market system, as many suppliers have been unable to provide customers looking to switch with accurate quotes due to inaccurate or missing data.

Ofwat have also reportedly told retailers that they need to make it easier for customers to compare offers. However, the biggest issue raised by companies that have switched was with billing – MEUC members specifically cited problems such as inaccurate bills and being put on the wrong tariff.

Achieving a seamless switch

If you want to gain the benefits of switching for your business, but you’re concerned about the potential issues you could face, Inenco can help.

We can guide you through the switching process, from finding the right procurement strategy for your business to choosing a supplier that can provide all of the services you need. Our advice is completely impartial, and can help you to make sense of the new market. Our services don’t end once you’ve switched either – with our water analysis service, we’ll undertake charging tariff amendments, resolve any charging errors and investigate your excess consumption potential. We can even process all of your water invoices, just as we do with your electricity and gas invoices – get in touch today on 08451 463626 or email