Be prepared for big changes

The introduction of competition into the water business market is going to move the goalposts for water companies. The journey ahead is daunting – and rewarding. Mark Powles writes.

I was never in the Scouts when I was a boy, but their motto “be prepared” always seemed like pretty good sense to me. It rang especially true when the Scottish non-domestic water retail market was being opened up to competition. The regulator made it clear at the time that customers would be given their choice of retailer regardless of whether we were ready or not, so being prepared was a critical part of making the market work.
That was in 2008. Professor Martin Cave’s original review into a competitive water market in England was published the following year.
A lot has happened since then (although it seems like a quick six years now), and the prospect of market deregulation has been on the cards for even longer. Customers in England have been taken to the altar and been jilted more than once.
We’re now edging closer and closer to the actual wedding ceremony with the Water Bill expected to receive Royal Assent in April of this year. We’ve had readings of the Water Bill in the House of Commons, readings in the House of Lords, amendments, committees, working groups, blueprints and plenty more besides. It has been a long journey but competition in the English non-domestic water market is almost in legislation and we can look towards an April 2017 market opening.
This is only the start. The hard work really starts now, and we need to remember why the market is being reformed in the first place. It’s so that we can deliver improved service, better value for money and increased innovation for the most important part of the market – the customers. None of us in the industry – retailer, wholesaler, investor, regulator or otherwise – can or should claim to be the reason for such a broad and ambitious programme of reform. It’s all about the customers. It can be easy to lose sight of this with so many stakeholders, and an even broader range of views on how things should move forward.
Much like when I joined Business Stream prior to market opening in Scotland, retail competition in England is coming. To make this market successful, all market participants must come together to create it. For any retail market to work, we need a robust, orderly wholesale market which is properly geared up to serve the requirements of retailers, who ultimately serve customers. We have to remember that, when it comes down to it, customers are the only ones who keep any of us in a job.
I’ve spoken before about water companies being prone to doing things to customers, rather than with them. This time, the shoe is on the other foot. If water companies in England don’t embrace every aspect of reform – not just the bits they think their shareholders might like – that will result in a juddering, clunky market where customers feel frustrated rather than in control. If all industry participants don’t work together to create an orderly and effective market, our customers will suffer and we’ll all look stupid. This isn’t a time to sit back and watch the wedding party, it’s a time to get involved and ensure that the market works. Water companies in England have the choice of swimming with the flow of reform, or against the tide. Where they don’t have a choice is the direction in which the tide is running.
It’s more than just creating retail arms to serve business customers and compete in a competitive marketplace. The market will need competent wholesalers. That means wholesalers with the ability and willingness to contract with retailers quickly, transparently and fairly. It also means wholesalers who recognise that what matters is the outcome for the customer, and that the system can’t simply be governed by numbers on a spread sheet.
When Wics threw down the gauntlet to Business Stream more than six years ago, it was a pretty daunting challenge. No-one had a tried-and-tested playbook detailing the lumps and bumps of a competitive water retail market. Both Business Stream, as the incumbent retailer, and the wholesaler had to work extremely hard defining our roles and responsibilities. In England, while a policy framework will give guidance, it won’t have all the answers. The industry can’t just sit back and wait to tick the boxes in a list given to them – they’ll need to create that list for themselves.
In England, there are 21 wholesalers and somewhere in the region of a million customers. Every water company needs to work out how they want to operate in this new market and how they will transform their business to get there. No-one will tell them how to do it. Every company, including Business Stream, will need to work it out for themselves. The water companies will need to work out how to be effective wholesalers and what their approach to retail will be.
Which brings me back to where I came in. The clock is ticking. The wedding band is tuning up. Our customers are waiting. We have a responsibility to come together as a market, to agree an orderly plan that gets us to an effective, simple and transparent market on time, a market that delivers tangible benefits for customers. Six years ago when the challenge was laid down in Scotland it was daunting, but the journey we have been on has been exciting and as a business we’ve learned a lot. We’re looking forward to doing it all again.