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Research by the Consumer Council for Water (CCWater) has found there is appetite among water customers in England for competition in the household retail market, with two thirds saying they would welcome the opportunity to shop around for a different retail supplier.
However, the survey revealed only one third would consider switching when they were informed that actual savings could be as little as £4-£8 on the average annual water and sewerage bill.
CCWater said the lure of lower prices – rather than better customer service – would provide the biggest motivation for customers to consider switching water retailer, or negotiate a better deal with their existing water company.
When asked how much they would need to save on their own water bills to switch, 44 per cent of households said more than £40 per year – more than the total value of retail services on the average water and sewerage bill.
CCWater chief executive Tony Smith said: “Most customers like the idea of choice, especially if it can reduce their water and sewerage bills. But many customers have made it clear that they will not waste their time shopping around if the savings are so small and fall well short of their expectations.”
The consumer group carried out similar research in 2008, which suggested there was “some appetite” for competition among households. It also revealed households had “significant expectations” – particularly around how much they could save by switching – and “concerns about how the market would work”.
GRAPH: customers that agree or disagree with the principle of introducing competition in the water industry
Source: CCWater
The Treasury announced at the end of November that it wanted to introduce competition into the domestic water market. This came as a surprise to companies, which were not expecting domestic competition to follow non-domestic so quickly.
However, the industry reaction was tentatively positive, with water companies assuring they will work with government, the regulator and customers to “assess the potential” for competition.
Ofwat is set to complete its review later this year, and competition could be introduced as early as 2020.
GRAPH: reasons for supporting water market competition
Source: CCWater
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