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Portsmouth Water has become the first water company to announce it will exit the business retail market when competition is introduced in April next year.
Scottish supplier Castle Water will take on the retail activities for business customers on behalf of Portsmouth from April 2016 until April 2017, when it will be handed full responsibility. The deal was agreed for an undisclosed amount.
Portsmouth Water managing director Neville Smith told Utility Week retail revenue from its business customer base represents just 1.6 per cent of its total revenue, meaning it would need a “huge investment” to be successful in the new market.
He said operating in the retail market was “not the right thing to undertake”. “The executive team have worked with the board over a number of months to come to a decision that is in the best long-term interests of the company,” he said, adding that working with a specialist provider represents the “most sensible and cost-effective solution” for the company and its customers.
Portsmouth will continue to provide retail services to household customers which make up 95 per cent of its customer-base. It said it “fully intends to participate in the household retail market, if it happens”.
The firm will also continue to supply water to all of its existing customers, and will remain responsible for water abstraction, treatment and pipe maintenance.
Smith said no job losses or transfers are anticipated.
The market is due to open in April 2017, allowing 1.2 million businesses and other non-household customers of providers based mainly or wholly in England to choose their supplier of water and wastewater services. It will link with the existing market in Scotland, which opened to non-household customers in April 2008.
The government introduced retail exit to the Water Act 2014 at the eleventh hour, following an sustained lobbying effort by peers in the House of Lords, regulators and some water companies, who all believed it that the proper functioning of a competitive market required companies to be able to exit if they wished.
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