Chief executive’s view: The water market must work for customers

It is up to water companies to communicate the benefits of competition to customers.

There are now less than 12 months to go until the English non-domestic water market opens and just the summer between now and shadow operations. After years of deliberation and preparation, the prospect of competition in this sector is beginning to feel like a reality rather than a distant dot on the horizon.

Many of the mechanics for how the market will operate have been agreed and market participants, customers and other stakeholders are beginning to see the foundations for the market taking shape. If this pace is maintained, then we can have more confidence as an industry that we will achieve the critical milestones necessary to open the market in April next year.

That said, we and others do remain concerned that certain issues such as the level of retail margins and lack of standardisation or harmonisation across regions will be problematic. As with any competitive market, the aim is to deliver financial savings, service and innovation benefits to customers: something that can only be delivered in a fair and effective marketplace.

We must continue to focus on customers as the finishing touches are applied to the English water market. It is all too easy to become fixated on technical industry-centric details, and we need to keep reminding ourselves why we are doing this. While the prospect of competition is something we all take for granted, it’s clear that many businesses and other organisations do not yet realise the changes that are coming, nor their significance.

In the coming months we will be ramping up our efforts to engage with existing and potential customers about what is happening and what it means for them. If the benefits of the new market are to be realised, businesses need to be prepared and able to take advantage of the opportunities available. In our efforts to help customers get switch-fit, we have been highlighting four key issues:

1. Understanding their current water usage and wastewater production, including volumes and costs.

2. Future business and operational factors which may impact on water usage, such as changes in production or investment in new facilities.

3. Reviewing trade effluent arrangements to ensure that these are current and appropriate.

4. Supplier and service requirements – such as customer service, added-value products or services and account management support.

The first three in particular are data driven. Many organisations and businesses will be unaware of the volume of services they consume and the associated unit costs, others who are more aware may still have gaps in their data. Customers who want to capitalise on the benefits of market opening should prepare and review their data now, potentially in partnership with their existing supplier, and identify core sets of data for each of their sites in advance of market opening.

The fourth is focused on the broader benefits of competition beyond price. Inevitably, many customers will be most interested in the prospect of their water bills reducing. Given the low margins available, the industry will need to work hard to communicate the other benefits of competition, including reduced overheads, improved customer service levels, improved flexibility to interact with retailers, smarter regulatory compliance, solutions to water management challenges and improved water efficiency.

The next few months are shaping up to be pivotal for the non-domestic water market. As the industry grapples with the last remaining issues concerning the operation of the water market, more customers will be waking up to the change that looms on the horizon. It’s incumbent upon the water industry to start communicating the significance and the potential benefits that this change will bring to businesses across the country.

Johanna Dow, chief executive, Business Stream