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22 | 5Th - 11Th AUgUsT 2016 | UTILITY WEEK Customers quitting non-household retail could hin- der a company's chances in the household market – if, or when, it opens. However, Sid- dall said that the decision will actually make it easier to compete in the household market, as billing systems will be simpler. So why Castle Water? Siddall said Thames admired the secrecy surrounding the Scottish supplier's deal with Portsmouth Water. As the company responsible for serving the cap- ital, Thames is scrutinised to a much greater extent than some of the other, smaller water companies. That, Siddall explained, makes it "very difficult to work out who you can share your information with". He said that a more general tender basis would have risked information being leaked, which would have been damaging to the business and its staff. "It is altogether a very clean deal," he said. "We felt that it was within everyone's interest that we chose Cas- tle Water." Analysts at consultancy firm Frost and Sullivan believe other companies are likely to follow Thames Water and exit the non- household market, as the retail margin is not big enough to attract the largest utilities. "Even with the opening of the market there is little margin that the retail water service companies can secure with the non-household customers," said Frederick Royan, Frost and Sullivan's vice president of global environment, water and waste man- agement practice. He believes that utilities should "focus on their household customers" in the com- ing years so they can be "better equipped in capitalising on the retail opening of the household market", which could happen as early as 2020. Thames Water is the third incumbent to have exited the market, aer Portsmouth Water in January and Southern Water in June. All three have sold their customer bases to existing Scottish suppliers, and oth- ers are eyeing the market hungrily. But amid all the mergers, joint ventures, acquisitions and rebrands, the sector has yet to see a truly 'new' English entrant. Profiles: Thames Water Chief executive: Martin Baggs Founded: 1989 Revenue: £2.047bn Pre-tax profit: £197.9m Staff: 5,000 Parent: Kemble Water Holdings Business customers (from April 2017): none Castle Water Chief executive: John Reynolds Founded: 2014 Profit/loss (2014/15): £412,186 Supply points: 5,000 Business customers (from April 2017): 280,000 On 24 June Southern Water announced its exit from the non-household retail market that will come into force from April 2017, at which point Scottish retailer Business Stream will take over its business customer base. The deal will give Business Stream more than 10 per cent of the market, effectively doubling the size of the company. Utility Week asked Business Stream chief executive Johanna Dow to explain the deal's significance for the wider market. Customers need to know what's coming to benefit A s the countdown to the opening of the non- domestic English water market continues, we are finally beginning to see an increase in consolida- tion and acquisition activity. At Business Stream, we have made our own bold move by acquiring a major customer portfolio to ensure we are well placed when the market opens. However, we are by no means alone in our efforts to prepare for the opportunities on offer next April. In 2011, the UK government published a white paper underlining its desire to create a fair, competitive market offering more choice for business customers. One of the clear consequences of greater competition was the inevitability of some incumbents exiting the market and others aligning their operating models to the new market. With eight months to go until the market fully opens, that's exactly what we're seeing now. And with the pace of deal-making intensifying in the lead up to 2017, it is customers who stand to benefit most from this sector shakedown. A key argument presented by the advocates of full competition is that the move will drive innovation and improve the range of services and tariffs avail- able for customers. With limited scope for price competition (a consequence of the low margins in England), suppliers will have to differentiate themselves by other means. Customers are already seeing greater choice in terms of potential suppliers, but where they stand to gain the most is in the range of propositions on offer through these suppliers. Over the past eight years of Scottish competition we have developed our cus- tomer offering to stand out in an increasingly competitive market. Designing and delivering added-value services and continuously raising the service bar have been key elements in our strategy to retain and win market share in Scotland. The current captive and protected customer base in the English market offers limited incentives for companies to invest in improving the customer experience. The advent of competition is stimulating a new mind-set with increased focus on adding value for customers. While most medium-size businesses and corporates will understand the changes taking place in England next April, there is still much to be done to ensure that SMEs, which represent 90 per cent of the English market, fully understand the choices available. Many of these smaller businesses lack a dedi- cated procurement team, so it is incumbent on us all to ensure that there is suffi- cient awareness of the ability to switch water utility come April 2017. This aware- ness is vital for the long-term success of the market, and for motivating suppliers to innovate and improve services for all customers, not just the biggest. Following MOSL's recent announcement that its programme of work has returned to amber status, the shadow market is now in clear sight. As companies begin to declare their hands, and the industry makes its final preparations, we need to ensure that England's non-household customers know what's around the corner so they can make the most of the benefits available. There are eight months le for market participants to conclude their prepara- tions, and only two before shadow operation. The biggest change in the UK's water market for a generation is beginning to feel very real. Johanna Dow, chief executive, Business Stream Column ☛