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28 | 9TH - 15TH DECEMBER 2016 | UTILITY WEEK Markets & Trading Analysis W ith just over three months to go until the non-domestic water retail market opens, we are beginning to get a clear sense of what the sector will look like on Monday 3 April 2017. The final consolidatory deals are tak- ing place, as can be seen with the bidding war going on between Severn Trent Group and Ancala for control of Dee Valley Water. A number of re-brandings have been com- pleted, and the Scottish retailers are cement- ing their bases in England ahead of spring. There are set to be 19 bona fide retailers ready to go in the English market, while more new entrants continue to apply for licences. Elsewhere, the more established players are making the last-minute adjustments to their teams in an attempt to get themselves as best prepared as possible. Two months into the shadow opera- tion period, everything appears to be going smoothly, with no major crises emerging from the Open Water programme and the second assurance stage passed. Focus now turns to potential custom- ers, with the emphasis placed on small and medium-sized enterprises (SMEs), many of which are unaware of the pending competi- tive market and have been disengaged from the process as a whole. This is the key area for the sector, so much so that regulator Ofwat has begun a probe into SME aware- ness of the Open Water programme. Market taking shape A number of non-domestic water retail brands have been created – such as the Sev- ern Trent-United Utilities joint venture Water Plus. This process of preparing for competi- tion has seen the final few incumbents set up their commercial retail arms. The latest moves have seen Pennon and South Stafford- shire Group join forces to create the fourth- largest non-household retailer. This deal will see Pennon retain an 80 per cent share in an enlarged Pennon Water Ser- vices and the operations merged in Bourne- mouth. South Staffordshire Group will take the remaining 20 per cent once the busi- nesses merge in April 2017. Water Market Quarterly Utility Week presents an executive summary of the latest quarterly report from its premium information service, Utility Week Intelligence, as the UK water market prepares for competition. © Utility Week Intelligence | Windsor Court, Wood Street, East Grinstead, West Sussex, RH19 1UZ | +44 (0)1342 332000 | www.utilityweekintelligence.co.uk Water Market Quarterly December 2016 With just over three months to go until the non-domestic water retail market opens, we're beginning to get a clear sense of what the sector will look like on Monday 3 April 2017. The final consolidatory deals are taking place, as can be seen with the bidding war going on between Severn Trent Group and Ancala for control of Dee Valley Water. A number of re-brandings have been completed, and the Scottish retailers are cementing their bases in England ahead of the spring. There are set to be 19 bona fide retailers ready to go in the English market, while more new entrants continue to apply for licences. Elsewhere, the more established players are making the last-minute adjustments to their teams in an attempt to get themselves as best prepared as possible. Two months into the shadow operation period, everything appears to be going smoothly, with no major crises emerging from the Open Water programme and the second assurance stage passed with no issues. Focus now turns to potential customers, with the emphasis placed on small and medium-sized enterprises (SMEs), many of which are unaware of the pending competitive market and have been disengaged from the process as a whole. This is the key area for the sector, so much so that regulator Ofwat has begun a probe into SME awareness of the Open Water programme. Market taking shape A number of non-domestic water retail brands have been created – such as the Severn Trent-United Utilities joint venture Water Plus. This process of preparing for competition has seen the final few incumbents set up their commercial retail arms. The latest moves have seen Pennon and South Staffordshire Group join forces to create the fourth-largest retailer in the non- household retail market. This deal will see Pennon retain an 80 per cent share in an enlarged Pennon Water Services and the operations merged in Bournemouth. South Staffordshire Group will take the remaining 20 per cent once the businesses merge in April 2017. Sainsbury's Sainsbury's was founded in 1869 by John James Sainsbury and his wife Mary Ann Sainsbury in London. It has since grown to become one of the UK's largest retailers. The supermarket chain believes water is the "most precious natural resource in the world". Every year, it says, it strives to measure, manage and reduce its water use as it keeps growing. In March 2013, Sainsbury's reached its ambitious target of reducing usage by 50 per cent on 2005/06 levels. The company says it worked in three stages to reduce its water consumption 1. It extracted information from the water companies to establish its actual water consumption by comparing it with billing data. This enabled the chain to benchmark its stores against an industry standard. 2. It identified five areas with the potential for savings – high consumption sites, water audits, water leaks, surface water drainage and automatic meter readings (AMR). It rolled out more than 650 AMRs to identify leaks, and carried out water audits to see where it could reduce consumption. 3. It installed water efficiency technology, such as waterless urinals, low-flow toilets, percussion taps and more than 170 rainwater harvested and reclaimed water car washes. It made rainwater harvesting systems standard in all new supermarkets. Sainsbury's currently has three "water neutral" stores, where its volume of supplied potable water is being offset by investing in savings and efficiency. These are at the University of Leicester; Wey Valley School and Weymouth Academy. This has enabled these institutes to use less water, collectively the equivalent of 15 Olympic swimming pools, saving them an estimated £100,000 from their combined water bills to date. The company sits with Anglian Water on the board of HRH Prince of Wales water taskforce, collaborating on projects to improve water efficiency, water quality and catchment management. Sainsbury's says it will continue to "work hard" to use water more sustainably and is looking at how it can save more water and become more efficient than its current 54 per cent relative reduction rate. To help it achieve these ambitions, it is researching new technology it can install in its stores. The company is also in the process of analysing its water strategy in preparation for April 2017 when the water market follows the lead of the energy market and opens to competition, meaning it will no longer be restricted to choose a water supplier based on region. Customer profile Key facts • Founded: 1869 • Founder: John James Sainsbury • Headquarters: Holborn, London • Number of locations (2015): 1,312 • Chairman: David Tyler • Chief executive: Mike Coupe • Revenue (2015): £23.8bn • Employees (2015): 161,100 Key milestones • Business improvement activities – cycle 1: 09/12/2016 • Quarter 1 reporting to Defra/Ofwat: 16/02/2017 • Final assurance letter – delivered: 17/02/2017 • 2017/18 MOSL business plan to be approved: 28/02/2017 • No/Go live end stage review: Starts – 09/01/2017; Ends: 03/03/2017 • Test Outcome plan – design and build: 21/03/2017 • Market entry certification complete: 31/03/2017 • New trading parties certified and neces- sary market entry re-assurance completed: 31/03/2017 • Market entry go live: 03/04/2017 PROFILES The following are extracts from full profiles, which are available to Utility Week Intelligence subscribers. Sainsbury's Sainsbury's was founded in 1869 by John James Sainsbury and his wife Mary Ann Sainsbury in London. It has since grown to become one of the UK's largest retail- ers. The supermarket chain believes water is the "most precious natural resource in the world". Every year, it says, it strives to measure, manage and reduce its water use as it keeps growing. Three Sixty Three Sixty is a new player in the non- household water retail market. Born out of Yorkshire Water and part of the Kelda Group, Three Sixty is a new breed of water services company. The company is taking a distinctive approach to the market, which is made up of more than 1.2 million business custom- ers across the UK. Its focus is centred on adding value and making water work for its customers as seamlessly and cost-effectively as possible. Blue Business Water Blue Business Water (Bluewater) was founded in 2014, is licensed and operating in Scotland and will be offering its services to businesses in England when the market opens next year. Furthermore, MOSL rated its own pro- gress towards market opening at 63 per cent in April – up 1 per cent from its position in January, but significantly behind water wholesalers (71 per cent) and retailers (70 per cent). This article provides a snapshot of the most recent report. To access Water Market Quarterly in full, simply log into your Utility Week Intelligence account. For information on Utility Week Intelligence, including a free trial promotion, contact Peter Bissell, Utility Week Membership, on +44 (0)1342 332057 or email peterbissell@utilityweek.co.uk.