Utility Week

UTILITY WEEK | 6TH - 12TH APRIL 2018 | 17 Policy & Regulation Comment on the first year Jo Dow, chief executive, Business Stream "We should reflect on the past 12 months with a sense of pride as we approach the one year anniversary of the English retail water market. Customers are already reaping the benefits of a competitive marketplace through improved choice, con- solidation and keener pricing. Looking ahead, we now need to focus on the remaining issues in order to create a market that can truly deliver for all customers." Lucy Darch, chief executive, Wave "The first year of the new non-household water market has gone largely as expected with early adopters from the multi-site and I&C segments requesting prices and being the first to switch. New teams, office locations, billing systems and processes are all settling in and the first year has been about getting everything working properly and there are still areas in which improvements are needed, such as bilateral communications, data quality and customer engage- ment. The water market participants are collaborative, and I believe that working together we will optimise the market as we move forwards." John Reynolds, chief executive, Castle Water "The market works. Customers who want to transfer have been able to do so. Separation of retail and wholesale has highlighted billing inconsistencies – the value of saving resulting from corrections to wholesale data exceeds discounts on prices. Sure, it could be refined further, but it works, and customers are benefitting." Sue Amies-King, chief executive, Water Plus "It's been an incredible year. While the complexity and scale of the market changes have been larger than many envisaged, our water experts have been working hard to resolve any issues this has created. Throughout the year we have also continued to invest in our systems and processes to enhance the services for our new and existing custom- ers. There is still a lot of work to do for all participants to make the market more effective for customers." Nish Dattani, managing director, First Business Water "Like any creation of a new market, the past 12 months, has seen a period of notable successes but also challenges. There is a workable framework of market rules, CMOS is functioning, and customers have been able to switch. Larger customers have benefited with consolidation across sites being the pri- mary driver. However, there is still a significant lack of awareness, especially amongst SMEs, about the benefits the new open water market brings." Water.Retail For the full set of results, including a break- down of the scores wholesaler by wholesaler, subscribe to Water.Retail: https://read.water-retail.com/water-retail Some of the survey's 11 criteria Portals In the context of the water market, a portal is a tool which facilitates interac- tion between wholesalers and retailers. Portals are commonly used by wholesalers but their use is not currently mandatory. Credit arrangements Credit arrangements are an important part of any market. If such arrange- ments are discriminatory or unclear, it could act as a barrier to entry. Wholesale tariffs The transparency of wholesale tariffs was an area of great concern for retailers and scores varied considerably. However, it was the way tariffs vary across different wholesale regions which was flagged as the biggest issue. Communication This includes telephone service, account management, and how fast they respond to queries. Both speed of response to queries and dealing with formal complaints were low-scoring categories. Emergency response Water.Retail's survey found a great deal of variation between the perfor- mance of different wholesalers. United Utilities scored particularly highly on dealing with emergencies. One retailer remarked that this was because the wholesaler has had experience dealing with emergency incidents such as flooding and the 2015 cryptosporidium incident. Has competition been a success? On 1 April 2017, competition was introduced to the non-household section of the water retail market in England, allowing 1.2 million busi- nesses to choose their provider of water and wastewater retail services. In preparation, the water market underwent transformational change, with water companies splitting out their wholesale and non- domestic retail businesses. Some – Portsmouth Water, Thames Water and Southern Water – exited the market altogether. The reasons Ofwat gave for opening the market in the first place were to drive down prices for customers, as well as to improve water efficiency, encourage innovation and enhance customer service. There was also a logic that opening the market for non-domestic customers would force companies to think about, and improve, their service to domestic customers. The advent of competition paved the way for a new set of players – the retailers, of which there are currently 25. These are either new players, retail arms of incumbent water companies, or independent companies that have joined the market from Scotland – which in 2008 was the first water market in the world to introduce competition. The retailers are essentially the customers of the 16 water wholesalers England, and Scottish Water in Scotland. The market has so far had 112,155 supply point switches, represent- ing about 4.5 per cent of a potential 2.6 million supply points estimated to be in the market. The switching level has divided opinion in terms of whether it constitutes success, especially since the number of actual customers that have switched is significantly lower than the supply point figure – probably about half. Then too, it's arguable that switching alone should not be the primary measure of market dynamism. The amount of water business customers consume is far more important in the long-term

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