Deregulation will be the biggest shake-up in the water industry in decades - and at SES Business Water, we know what it’s like to work within a competitive market. That’s because we already operate in the Scottish market, which has been open for competition since 2008.
While there are differences between the Scottish and English water markets, we believe that our experience in actively operating within a competitive environment will be invaluable when the water market opens in England on April 1st. Here are some of our key learnings:
Businesses will save money
Businesses will undoubtedly be hoping to see a reduction in their water costs when the market opens in England. In Scotland, cost savings were modest at first, but it’s now estimated that Scottish businesses could save between 15% and 20% simply by switching their water provider.
Naturally, there has been a lot of discussion about the level of savings that businesses should expect when the English water market opens; while opinions vary, it’s likely that businesses will see initial savings of around 2-3% on average. Market margins are unlikely to change significantly in the next two to three years, so there will be a limit to the discounts that suppliers can offer.
Businesses should avoid tying themselves into a long contract (more than 2-3 years) to ensure that they can take advantage of opportunities that emerge as the market evolves.
Multi-site customers, or those supplied with water and waste water services by different suppliers, can immediately benefit from internal cost savings by consolidating their portfolio so that all sites are with one supplier, meaning they can benefit from centralised billing and account management.
Water efficiency will be central
Our experts believe that the potential for businesses to reduce consumption, rather than costs, is where the real opportunities lie. Since the Scottish market was deregulated, one of the ways in which suppliers have been trying to differentiate their services is by helping businesses to become more water efficient. This has contributed to a reduction in Scotland’s water consumption of an impressive 16 billion litres, saving £35 million.
At SES Business Water, we foresee that English businesses will gain the most value from the new market conditions when suppliers combine lower rates with useful support for businesses looking to reduce their consumption. We’re already working with our customers to help them become more water efficient – from introducing smart meters to providing E-billing – and we hope that our fellow suppliers will have a similar focus on driving water efficiency for businesses.
Suppliers need to engage businesses
The full potential of an open water market will only be realised if businesses engage with it. Only 5% of the market switched in the first five years after the Scottish water market was opened, with Business Stream retaining 95% market share during that time.
We’re hopeful that although it took some time for businesses to fully engage in Scotland, now that the benefits of competition have been proven there’s no reason why switching levels shouldn’t be far higher – and far quicker - in England. A recent Ofwat report revealed that around two thirds of businesses remain unaware that they will be able to change supplier from April 2017. That puts much greater emphasis on us as suppliers to ensure that businesses are fully informed of the changes taking place so that businesses can make an enlightened decision about their water supply.
Customer satisfaction will be paramount
The increased competition will give businesses more bargaining power, so water suppliers will have to work hard to ensure that their customers are satisfied. More than 45,000 Scottish customers renegotiated the terms of their supply to receive better services, better prices (or both) in the first two years alone.
Our customers are at the heart of everything we do, so we’re looking forward to being able to provide even more businesses in England with our high standard of customer service. We’re also enthusiastic about offering our English business customers more innovative solutions to managing their water usage, such as our newly-launched Wholesale Tracker Plus product, which tracks the wholesale price and enables customers to create a service package that’s tailored to their business.
Our experience working in the open Scottish water market has given us vital insight that means we’re well-prepared to support our English customers through the impending market changes. If you’d like to talk to our experts about how the new market conditions might impact your business, get in touch today.