Guide on the changes to business water procurement

In 2017 the UK government passed the Water Deregulation Act, creating the largest competitive water market in the world. Over a billion businesses became eligible to use the water company of their choice, instead of being tied to their local provider.

A deregulated water market brings many benefits for businesses, including improvements in water delivery, customer service and in generating efficiencies. If your business is eligible you’ll have plenty of options available, including separate retailers for fresh water and water waste suppliers. With the changes comes pressure to make the right choice for your business, here’s all the information you need to know.

Who is eligible?

Currently, to qualify for water deregulation in England you must have at least one site based in the country and use more than five million litres of water per year. This means that over a million businesses are eligible, as the act is currently targeted toward companies with high water use.

It is expected that the regulations will be lowered in the future to allow more businesses to join, and in the later terms homeowners will also be given the option. The act is currently only available to businesses located in England and Scotland, and there is no indication of when Northern Ireland and Wales will pass the act.

What are the benefits of changing your water supplier?

Now that businesses are able to change their suppliers, some may wonder if switching is worth it. Having water be deregulated eliminates the monopoly that water companies have over local areas, alongside this there are many other benefits of changing suppliers.

1.     More competitive prices

Having water suppliers be deregulated means that there is nothing to stop you from shopping around to find the best water contract for your business. You can contact any company to receive a quote, and you may find that your business is better off financially for it.

2.     Better customer service

As mentioned, having a deregulated water supply eliminates the monopoly that water companies have on local areas, they can no longer control dictatorially as customers are capable of leaving. If your water provider isn’t treating you fairly or no longer meets the needs of your business, you’re capable of raising the issue of terminating your contract unless things change.

3.    Compiling your bills together

If your business operates many sites across a wide geographical area, you may be tired of managing water bills from many different suppliers. Switching to a singular company will provide all your bills in one place and greatly simplify the process.

Challenges of water deregulation

Although the act is capable of generating huge savings for businesses alongside better quality customer service, such a massive change will inevitably come with drawbacks. Though it is likely that your business will feel the benefits of water deregulation more than the drawbacks, it is still worthwhile knowing about them so that you’re able to see the full picture.

1.     Awareness isn’t high

Many businesses are not aware of the deregulation act, and are therefore not aware that they can switch water providers. According to one study, less than 38% of businesses were aware that they could switch, therefore you may be one of the only ones amongst your competitors to change suppliers.

2.     Operational issues

As water has never been deregulated on such a scale before, it’s likely there will be backlogs in many water companies as they manage businesses leaving and joining. This could have a knock on effect with things such as billing and customer service, though by 2022 its likely companies will have caught up.

What about SMEs?

As the requirements for water deregulation are aimed at businesses with larger water usage, it’s natural that SMEs may feel unacknowledged. Though since the act was passed, over 36,000 businesses have switched water suppliers – many of them SMEs.

In the future, it’s likely that the requirements for deregulation will be lowered and more businesses will be able to save money. Currently, it’s worth looking into if your business meets the requirements for deregulation and continually checking with Ofwat to see if there are any changes.

If you’re unsure of what the changes means for your business, contacting a third party to assist with water procurement.

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