Water switching figures remain steady

Only 3.5 per cent of the 2.7 million supply points in the business water market have switched since market opening.

The pace of water switches slightly picked back up again in the third quarter with the latest figures from the market operator showing 30,649 switches were processed during October to December 2017.

This compared to 25,010 supply points having switched water retailer in the second quarter.

Since the market opened to competition on 1 April 2017, a total of 91,960 switches have taken place.

In its third CEO Quarterly Market Review published today (25 January), Market Operator Services Limited (MOSL) said Q3 saw the largest number of switches, once the pre-market switches were taken into account.

Chris Scoggins, chief executive of MOSL, said: “We have seen encouraging developments in the last three months, with two new retailers – Marston’s and First Business Water – joining us over the quarter and more on their way to doing so.

“Ofwat, the industry regulator, is looking to create a means of monitoring contract renegotiations by customers, another equally important indicator of engagement in the market.”

He added: “We are currently running the first market audit, designed to increase confidence in the market by providing independent assurance on trading party compliance, MOSL compliance and on CMOS [central market operating system].

For the first time, the report breaks down the differences between the regions, with businesses in the south and south east of England having the highest levels of switching activity.

A statement released by Ofwat in response to MOSL’s findings suggested the figures are “promising” but highlighted the regulator will continue to monitor the market.

Emma Kelso, Ofwat’s senior director of customers and casework, said: “We have seen a steady increase in businesses switching water supplier or renegotiating with their existing provider since the market opened in April 2017.

“The third quarter figures are promising and we hope to see businesses continuing to take advantage of the opportunities they now have.

“We are now seeing more self-suppliers and national retailers entering the market, which is encouraging. This offers customers all over England more choice for their water supplier as retailers are not restricted to specific regions.

“However, Ofwat is continuing to monitor how the market is developing and is in the process of carrying out insight work with businesses across England to find out how the market is working for them. With this, we are continuing to work with colleagues across the industry to ensure that the business water market works efficiently and remains fit for the future.”

Alan Lovell, chair of the Consumer Council for Water, told Utility Week: “It’s encouraging to see switching rates increasing but we’d like to see a greater share of small and medium-sized businesses aware of the market and actively engaging in it.”

“We know a lot of SMEs are still unclear about the potential benefits to their business and ‘what’s in it for them’. Retailers can address this by reaching out to small businesses and offering greater clarity over their price and service offerings.”

The report showed the five largest national retailers account for more than 80 per cent of the total number of supply points served by national retailers. They are: Water Plus; Castle Water; Anglian Water Business; NWG Business and Business Stream.

Meanwhile the total number of supply points served by regional retailers has decreased since market opening due to customers switching across to national retailers.

Volumes of supply points switched during the quarter show new entrants retained the level of uptake at around 35 per cent of the supply points switched as in the second quarter.