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UTILITY Week 27th January 2017

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UTILITY WEEK | 27TH JANUARY - 2ND FEBRUARY 2017 | 9 Interview JT: "Oh yes, that's another one, there is no tie-in – you can leave. Well you need to stay for a month so your meter can be read. But there's no contractual binding… we will operate on a rolling one-month contract." RR: "We believe in switching. It works in our favour so we don't want to limit people." Lord Redesdale, how will you use your contacts at the Energy Managers Association? RR: "We want to offer a bespoke service, so we will survey people before we go in. We see it as a partnership with the customer. "The trouble energy managers have always had when it comes to water is that it has been considered the 'poor relation', so they've never been able to invest in water in the same way. They all want to do water efficiency, and what we really want to do is to come in and help them to find the best methodology for saving water." JT: "It's like being a detective, we get to go in, look at where all the best solutions are and implement tech solutions to save water. It's really exciting." RR: "We're going to have a lot of fun doing this because there is a huge amount of technology which hasn't been used in the past that we've got in our arsenal. The funny thing is, not a lot of it is rocket science. "I can see where the water companies had a problem with innovation in the past. With the AMP cycle, I always get the idea that anybody who had a good idea was taken out and stoned to death, just in case it had any effect on their AMP cycle negotiations." What are your expectations for the first few days, weeks and months of the market? JT: "Fun." RR: "It'll be fun for us but a damp squib for most peo- ple. "We've gone from an expected 40 providers down to 18 or 20. But I don't think it really makes a difference, I don't think 'day one' is a big bang moment. For certain companies, market opening will be busy and exciting, for a lot of people it's going to be a damp squib. "If it's a damp squib, nobody should complain that Ofwat hasn't done its job because I think competition should be judged in the first year or two years, not on the first day." JT: "Hopefully the systems will work." RR: "They will work because probably 90 per cent of customers won't switch, because 90 per cent of custom- ers are so small – why would they?" JT: "But that's not going to drive sustainability benefits in the UK. The market needs to have environmental ben- efits, social benefits and economic benefits. If it's just a case of 'you were with Midland Water and now you're with Midland Water Retail, and it's exactly the same', then the market hasn't worked." JT: "There still seems to be a very big water company mentality." RR: "Well it's a utility mentality." JT: "It is a utility mentality. And we're not seeing any disruptors coming in yet." But there are many companies that claim to be disruptors. JT: "Yes, they are going to cause disruption alright… but I'm disappointed that there aren't any other proper Uber-style disruptors. They could've come in and set themselves up as a broker for self-serve – they wouldn't then be regulated. "There are a couple of disruptive approaches that we have, but I don't think we can mention those yet." RR: "This is one of the reasons there aren't companies from other sectors in the marketplace – it just hasn't occurred to people. Water is boring." JT: "That's another point, do some of the incumbent companies even enjoy this? Or have they just set up a company because they feel obligated to do so? We're doing it because it's fun. It's interesting, it's exciting, we have an objective. Do our competitors have that?" RR: "I think a few of them will be looking to sell out very quickly." Where would you like The Water Retail Company to be in five years? RR: [Grinning] "Multi-billion pounds' turnover." JT: "Providing water efficiency to as many people as possible." RR: "Our aim is to grow the company significantly." JT: "We think that our offering is fairly simple, it's got water efficiency built into it, and it's a very compelling offer. Our main concern is growing too quickly to be honest." RR: "If we reduce the amount of water that all our customers use by 10 per cent, we'd see that as a success. And the two are linked, if we're large it's because people see the value of water efficiency." JT: "The bigger we are, the better, as long as we stick to our core principles. We don't want to be massive and make a load of money but sacrifice the service to cus- tomers and the water efficiency part." RR: "We'll sell it off to somebody for multi-millions and they can do that… no, but seriously, as a small com- pany, we can't make projections on money we haven't earned yet." JT: "Our business plan at the moment is projected for three financial years. Five years – we don't know yet." RR: "If we're successful, we will be 1 per cent of the marketplace." JT: "Which is huge." RR: "Which for us would be enormous, but we'd still only be 1 per cent of the marketplace." JT: "Unless we can go for the Uber-style disruptive approach. There are possibilities around that, but that's certainly not an aspiration yet." RR: "And I don't think we'll ever be big enough to go into the domestic marketplace." JT: "At the moment we're doing this. There is no domes- tic market being opened, and this company would not compete in the domestic market if it did open. "This is The Water Retail Company for businesses. We're not doing anything else, we're not selling bananas on the side, we're not doing domestic, we're not expand- ing and buying an energy company in Mexico. We're just doing, boringly, what it says." Biography: Jacob Tompkins Jacob Tompkins will be leaving his post as managing director of water-efficiency organisation Waterwise at the end of March so he can begin his new role as chief technology officer at The Water Retail Company. This ends an 11-year tenure with Waterwise, which he co- founded with his replacement Nicci Russell. Before Waterwise, Tompkins gained substantial expertise in the sector having been a policy advisor at Water UK between 2002 and 2005, and an environment specialist at the National Farmers Union for four years before that. In April 2017, the English non- domestic water retail market opens to competition. Eligible businesses and other non-household customers will be able to choose their suppliers of water and wastewater retail services. 1.2m The number of eligible business customers in this new market. £200m The benefits a competitive water market is expected to deliver to the UK economy. 14 The number of companies licences to compete in the market so far. £300k The budget for the awareness campaign. 2008 When the Scottish non-domestic water retail market opened up to competition. WATER MARKET FACTS

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