What is water deregulation?

Water deregulation in the UK is about removing barriers to competition and opening up the retail market for non-domestic customers. Only two countries in the UK have gone, or are going, down the deregulation route.

Advantages of deregulation

  • Freedom to negotiate better deals

  • Better customer service

  • Choice of multi-service bundles

  • One supplier for water and sewerage

  • Fewer bills for multi-site customers

  • Water efficiency savings

  • Better data, less consumption

  • Seamless cross-border deals with Scotland

Water deregulation in Scotland eight years on

Scotland became the first country in the world to deregulate its water market for non-domestic customers in 2008.

Today, UK utilities consultancy Utilitywise estimates businesses in Scotland can make savings of 15% to 20% just by switching supplier.

The Scottish government pulled the plug on the monopoly held by Scottish Water by forcing a split between its wholesale (infrastructure) and retail (customer services and billing) arms in both water supply and waste services.

Two Scottish water companies emerged after the split – Scottish Water was appointed to run the infrastructure part and remains the wholesale element of the industry.

Business Stream is the retail arm of the industry and is responsible for all billing and service issues.

Others were slower to come around to the benefits but competition has improved as the benefits of Scottish water solutions have ticked up. They include discounts for customers and significant reductions in administrative costs for multi-site organisations who can deal with one single supplier.

“Licensed providers could offer discounts to customers by buying water at the same price Scottish Water supplied it to Business Stream, enabling them to take advantage of the increased margin between the wholesale and retail price,” said Tony. “Discounts increased again when the market was rebalanced two years later.”

Water deregulation in England can expect to see smaller margins, so the savings will be more modest than in Scotland. But although Wales and Northern Ireland remain to be convinced, overall the Scottish experience has been positive, with the disadvantages ebbing as the advantages flow.

England counts down to water deregulation

England follows in Scotland’s footsteps on 1 April 2017 when it also gives businesses, charities and public sector organisations more choice over their water and waste water retail supplier.

More than 1.2m eligible business and non-household customers will be free to choose. If you’re one of them, you can already shop around you don’t have to wait until next year to snap up deals.

The water industry in England is counting down to water deregulation on 1 April 2017 when increased retail competition will give customers more choice over their supplier.

This change to UK water regulations will increase industry competition, encourage innovation and efficiencies, and make the water market more attractive to new entrants.

Water deregulation will only affect non-domestic customers in England – that is, businesses, charities and public sector organisations. Until now, this type of customer had to be consuming more than five megalitres of water a year to be able to switch water provider.

From next year, any size of business, public sector or charitable organisation will be free to switch the retail part of their water services (customer services and billing) to their choice of supplier.

To kickstart water industry competition, regulator Ofwat has already asked England’s 14 regional water companies to split their retail businesses from their wholesale or upstream services. These include water sourcing, storage and distribution, and sewerage collection, treatment and disposal.

Some water companies have already decided not to have a retail division. This means the water account for thousands of consumers will be transferred to another water company.

Prices for England will be available from October 2016, giving non-domestic users the chance to shop around in advance.

What about the rest of the water industry in the UK?

For Scotland, these are not unchartered waters. It deregulated its water market in 2008 and has led the way in UK water deregulation. Wales has decided not to deregulate further and there’s no change on the horizon in Northern Ireland.

Advantages of deregulation

With increased competition, it’s hoped customer service will improve, although some water suppliers may be slow to change as they’re used to being a monopoly.

Customers with multiple sites will have one supplier for water and sewerage, and one bill instead of many, incurring fewer admin and processing costs.

Water deregulation in Wales

The Welsh government has yet to decide whether to implement retail competition for water and sewerage companies based wholly or mainly in Wales.

However, organisations located in England but served by such companies are eligible to switch water supplier if you use 50 megalitres a year or more. And non-domestic customers located in Wales and served by Severn Trent can switch if they consume more than five megalitres a year.

The Welsh government has yet to be convinced that opening up the water market is the right step for Wales – although evidence of improvements in Scotland may have some sway in future.

That’s not to say there isn’t any competition in Wales. Since 2003, users of large volumes of water – over 50 megalitres – are able to choose their retail water supplier if that retailer is based wholly or mainly in Wales. This threshold will remain.

So this group of businesses and organisations could still benefit from £200m worth of savings that government body Open Water estimates deregulation could deliver in England.

When water deregulation occurs in England, English and Scottish suppliers are offering to manage Welsh accounts to enable single billing, which will make it easier for those with multiple sites to manage bills with a single provider.

Water consultants at Utilitywise are already advising Wales-based customers with sites in England about how to get the most out of switching supplier. Tendering starts in October 2016.

Water deregulation in Northern Ireland

Government-owned Northern Ireland Water provides water and waste water services to 85,000 non-households. There are no plans as yet to enter a deregulated market.

Northern Ireland Water, the monopoly supplier, was formed in 2007 as a government-owned company (GoCo), whose shares are held solely by the Department for Regional Development. It’s also a non-departmental public body, subject to public sector spending rules.

NI Water has 85,000 non-domestic users among its customers. Unless your business in Northern Ireland has sites in England, you will not be able to switch supplier.

With or without supplier choice, there are ways that all organisations in Northern Ireland can improve their water management and pay less for water and sewerage services.

Water and waste water experts at Utilitywise can help you find the right water procurement contract or help prepare your business to switch water supplier.

Get in touch

You can contact us for help with anything that’s business water related, from water deregulation and the best business water rates to how to reduce your water wastage.

We can also help with any queries you have about energy cost management and how you can combine your water, electricity and gas into one package.

Need more guidance on water related issues: latest news, water prices, water efficiency advice and help to reduce your water waste call us now on 0333 920 5727.