36k business water switches ‘is not success’

Lack of awareness “holding the water retail market back”

The 36,301 switches which have been made by business water customers since the retail market opened “is not success”, according to the chief executive of new entrant The Water Retail Company.

Market Operator Services Limited (MOSL) has today published its switching figures for the first quarter of 2017/18.

The company reported that a total of 36,301 supply points have switched water retailer in the three months from March to June. This represents 1.4 per cent of the 2.6 million supply points that make up the market.

Lord Redesdale told Utility Week 36,000 “doesn’t sound like a lot”. He said that, although in a couple of years’ time the market will “probably take off”, that will take “a lot longer than people thought”.

Redesdale’s comments echo those made by Utilitywise chief executive Brendan Flattery, who suggested last month that market liberalisation had “gone off the boil”. In a letter to environment secretary Michael Gove, Flattery insisted that the regulator should therefore be “empowered to force suppliers to publish tariffs so that businesses can compare prices”.

Flattery reiterated his comments, pointing out that the latest MOSL figure is a reflection of meter switches rather than the number of businesses that have been able to switch.

“A deregulated market should bring lower bills and a better service to businesses across the country,” he told Utility Week. “However given the figures, it’s clear that market implementation has not been thoroughly thought through with the customer at the forefront of the strategy. 

“Small businesses are time poor and are therefore unable to compare suppliers and negotiate the complex pricing models. The market is effectively closed until these factors are rectified.

“Until the market is truly open Utilitywise will continue to campaign for an open water market, seeking to release the estimated £200 million worth of savings available for businesses across the country.”

Redesdale suggested that a lack of awareness may be holding the water retail market back. “We’re coming across people time and again who have no idea about deregulation of the water market,” he said.

“There are switches taking place, but I think what’s really holding it back is that one, the margins are very small, and secondly is just lack of knowledge that the whole thing is taking place in the first place. For the big incumbents – it’s not really in their interests to tell anybody.”

He also suggested there was a lack of incentive for retailers to go after small business customers, because of the small profit margin.

“There has been an increase in the number of retailers, but the actual number of operating retailers is still very small,” he said. “I think what you’ll find is that people go after the best contracts, but I can’t see much competition for the SME marketplace – there’s just not the money in it.”

A spokesperson for MOSL said: “While it is still early days in the new market, it is positive to see just three months in that customers of all sizes have been taking advantage of the opportunity to switch supplier; from the very smallest to the very largest.

“In its quarterly market review, MOSL reported that 21,000 of the 36,000 (58 per cent) supply points that have switched in the quarter use less than 1,000 litres of water a day. Examples of consumers with a daily consumption below 1,000 litres include local shops, pubs and churches.”