New supplier poised to enter English water retail market

A new independent water supplier – Blue Business Water – is gearing up to enter the non-household retail market in England.

The company, which focuses on small and medium-sized enterprises (SMEs), was granted a licence by the Water Industry Commission for Scotland in 2014 and has been operational in the Scottish market for around a year.

Director Chris Clark told Utility Week the firm is now “ready to bring its services down to England”, and stressed that it is keen to acquire the customer bases of companies looking to exit.

The company will apply for a water supply and sewerage licence from Ofwat before the deadline.

Clark said he doesn’t believe the market in England will experience a huge amount of switching to begin with, other than from large businesses with multiple sites.

“I think it’s going to be a massive opportunity, I just don’t think it’s going to go with a massive bang initially,” he said.

Blue Business Water will target the SME market, where the largest number of non-household users sit.

“[We will] look at new businesses coming in to each regional area, rather than customers who are probably satisfied and won’t be too interested in making a couple of per cent savings from switching,” he added.

He said a multi-utility offering is “the only way” new entrants will be likely to make money.

“Our growth strategy is two-pronged,” he said. “The SME market is not going to be served straight away from the market, therefore to entice those customers, companies will need to offer them other products and services such as electricity and gas to encourage them to switch.

“And where we can grow would be to acquire a base, or two bases, and use those bases as a platform to continue to provide water services.”

He added: “Several of our competitors up in Scotland have recently made acquisitions in the English market, and we are also very keen to acquire databases and customer bases in the English market if they are available.”

Market preparations

So far, Portsmouth Water, Southern Water and Thames Water have announced plans to exit the market. Scottish retailer Castle Water will take on the business customers of Portsmouth and Thames, while Southern’s customers will be handed to Scottish incumbent supplier Business Stream.

Read Utility Week’s analysis – Thames Water quits business retail – here and Q&A with Thames chief financial officer Stuart Siddall here

The total number of companies to have applied for licences since Ofwat opened the process now stands at 15. The regulator has predicted as many as 40 new applications in the coming year.

Scottish players Castle Water, Business Stream, Cobalt Water and Clear Business Water have all submitted applications to participate in the English market.

Read Utility Week’s Q&A with Business Stream chief executive Johanna Dow here

English incumbents which have applied for water supply and sewerage licences (WSSLs) are: Northumbrian Water Business – which has rebranded as Wave – Pennon Water Services, Anglian Water Business, Sutton and East Surrey Water Services, South Staffordshire Water Business, Water 2 Business, and Kelda Retail – which has been incorporated into Kelda Group’s new retail arm Three Sixty.

Read the full Q&A with Three Sixty managing director Robert Marrill here

South East Water Choice has applied for a sewerage licence only, in order to provide its existing customers with a combined water and sewerage bill.

Severn Trent and United Utilities have also applied for a WSSL their joint venture Water Plus, which was announced at the beginning of March. Chief executive Sue Amies-King told Utility Week that Water Plus would be “agile and innovative”, and bring in “fresh new ideas” from the new people being recruited.

Read the full Q&A with Amies-King here

Small Scottish supplier Everflow told Utility Week it is considering buying into the English market when it opens and will be applying for a licence soon. Veolia UK has also said it wants to grow its retail activities in the market, but has not yet applied for a licence.

Those wanting to join the market before it opens must apply to Ofwat on later than 5 October.