Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/756666
16 | 2ND - 8TH DECEMBER 2016 | UTILITY WEEK Policy & Regulation Market view A pril 2017 brings with it the biggest ref- ormation of the water industry in liv- ing memory. Currently, non-domestic users are able to use only their local supplier for all of their water needs, irrespective of the level of service they are receiving. Aer April next year the water market will become deregulated, allowing businesses, charities and public sector organisations the freedom to select the water supplier that best fits their needs. While this change has been on the cards for a long time, we believe that some busi- nesses are making the mistake of waiting until the deadline before securing their new water contract. By seeking timely advice now, companies can secure the best deal available to them, before the big rush to make the switch next year. We have seen the success of water dereg- ulation in Scotland already, with some com- panies reporting savings of up to 30 per cent on their water bills. However, some companies are lagging behind and holding back signing on the dot- ted line. These businesses may find them- selves scrabbling for a favourable deal come April and accepting a contract that is not necessarily the best fit for them. In order to prepare businesses and sup- pliers alike, Market Operator Service Lim- ited (MOSL) is running a shadow market in the run-up to deregulation in April. MOSL's role is to deliver the operational capabilities required to support the running of the dereg- ulated market. The shadow market is a tran- sition phase and will simulate live services to allow systems, processes and data collection to be trialled without commercial risk. Deregulation is coming regardless of whether companies actively choose to take part in the shadow market or not. Companies that do not prepare, or choose not to review their water supplier, may find themselves automatically migrated on to a service that is unsuitable for their business. Additionally, as some operators are leaving the market altogether, some businesses may find that they are passed on to a service provider not of their choosing. IMServ has been encouraging its custom- ers to make the most of the shadow market, so they can test the systems and processes which will come into force with deregulation. Although it is still too early to determine the long-term success that water deregula- tion will have on the UK market, the shadow market is off to a promising start. The true benefit that businesses are reap- ing by taking part is the freedom to test out processes and systems without commercial consequences. Water companies are able to trial how meter readings will work, experi- ment with tariff changes and switch suppli- ers, but no money will be transferred during this period because contracts will not com- mence until April 2017. Although April may feel like it is just around the corner, there is still plenty of time for those offering water services to ensure their customers experience smooth sailing during the switch. Ultimately, the shadow market is a chance for the main participants to reassure themselves that the UK water market is prepared for this change, has looked at the effect that deregulation had on the Scottish market and has taken learnings from the process. Richard Roberts, account manager, IMServ Stay ahead of deregulation Richard Roberts says some companies risk missing out on the best water deals due to a lack of preparation for competition which could cause them to get caught in a crush next April. Water competition in numbers • £200m of benefits from the English NHH retail market. • From April 2017, more than 1.2 million eligible businesses and other non-household customers in England will be able to choose their supplier of water and wastewater retail services. • This will expand the current £540 million-a-year water retail market to one worth £2.5 billion. • £1.8 billion of benefits from upstream competition in England. • The financial benefits from opening the English market to competition could be worth £2.9 bil- lion over 30 years. • Domestic customers in England could save £8 a year on their water bill with the arrival of competition.