Self-supply a ‘threat to water retailers’

Water retailers have warned of the threat self-supply presents, as it effectively takes a customer out of the market.

Water Plus chief executive Andy Hughes said at Utility Week’s Water Customer conference that the company would see it as a “failure” if one of its customers switched to self-supply.

“What they’re going to have to do is set themselves up almost as a retailer and interact with all of the wholesalers. Personally, I’m not sure they truly understand the amount of effort that’s going to be required for them to do that,” he said.

First Business Water managing director Nish Dattani told delegates there is an “element of threat” from self-supply, although the company itself is not actively targeting the types of large customer which may go for the mechanism.

The services self-supply customers have to provide themselves with “should be provided by a retailer”, he insisted, warning that there is an “element of threat” to larger retailers. “As the market evolves and some of the larger retailers are able to resolve some of the data issues and be more proactive in helping those organisations, then I think the market will start to move away from self-supply.”

Earlier this month, BT became the ninth company to be granted a self-supply licence. Other self-suppliers include brewer Greene King, hospitality firm Whitbread, brewery and pub retailer Marston’s, Coca-Cola European Partners, Blackpool Council, laundry firm Berendsen, pub company Stonegate and beer and cider company Heineken.

In an interview with Utility Week’s sister title Water.Retail, Ofwat senior director of customers and casework Emma Kelso said self-supply had “really taken off in a way which we weren’t expecting”. “It’s really encouraging and really good to see that larger players so far have been looking at what opportunities there are for them in the market.”

The regulator, in May, streamlined the process of applying for a water retail self-supply licence, to make it easier for business customers wishing to take the route. The changes came into effect immediately and include reducing the application fee from £5,250 to £3,000.

It said it believes the process could be “better tailored” to reflect the differences in the information needed to assess self-supply applications.

Previously, applicants applying to self-supply had to go through a process very similar to the standard water supply and sewerage licence (WSSL) applications process.

Following consultation, Ofwat is introducing a modified application process for business customers applying for WSSLs limited to self-supply. This is now separate from the standard WSSL application process.