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Potential savings for water clients are “disappointing for all parties”
The English water retail market is copying the mistakes of the early Scottish market, rather than learning from them, a broker has warned.
Energy Solutions procurement director Nick Grogan told Utility Week’s sister title Water.Retail that the potential savings for clients, given a gross margin of around 6 per cent are “disappointing for all parties”, and that there is “not enough of a saving available to excite most clients”.
“This will make initial progress challenging,” he said. “Hopefully the costs will fall and we will start to see some real competition and activity in the market.”
“Ofwat is keen to have competition and so there are a lot of licence being handed out, but with such limited margins there is little for companies to compete on, and this is reflected by the sameness of their offerings,” he said. “I suspect that some of the new suppliers will fail early on, and that there will be a significant number of acquisitions as companies look to buy market share.”
The world’s largest competitive water market officially opened on 1 April, allowing more than 1.2 million businesses, charities and public-sector bodies to choose their water and wastewater retailer.
The market is expected to deliver up to £200 million of benefits to the economy and water customers over the next 30 years, through improved service and value for money.
Twenty-two retailers are currently licensed to operate in the market. These include new entrants, incumbent retail arms, and one large business customer which has applied to supply its own retail services.
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