Yorkshire Water u-turns on retail plans amid sale rumours

New water market shock anticipated as Three Sixty customer transfer ditched

Yorkshire Water has abandoned plans to transfer existing non-domestic customers to its retail spin out, Three Sixty, amid rumours that it may sell off its business book.

In a statement released last week, Yorkshire Water confirmed that it will not push ahead with a plan to exit the market by transferring business customers to Three Sixty, the retail brand launched in September 2016.

Instead, existing business customers will continue to be served by Yorkshire Water Business Services, it said.

However, rumours are building within the water market that Yorkshire may be planning to go a step further and sell off its business customer base, exiting the competitive retail market altogether.

Northumbrian Water is tipped as a possible buyer for the non-domestic customer base.

Yorkshire Water and Northumbrian Water declined to comment on the possibility that they were poised to strike a deal. However, a range of industry sources, including leaders at other incumbent water companies, told Utility Week that they would “not be surprised” if the rumours were true.

Many also said that it is likely other large water companies will still decide to exit the market, even after it opens fully to competition in April. Shareholder appetite for involvement in a low margin and potentially volatile market is generally low, Utility Week was given to understand.

Yorkshire Water first indicated that it was looking to pull back from its plans to transfer customers to Three Sixty, in January this year in a notification to the Department for the Environment, Food and Rural Affairs. A recent update on the department’s website confirmed: “Yorkshire Water Services have now decided not to proceed with their exit to Three Sixty Water.”

A spokesperson for Yorkshire told Utility Week that, despite the change in strategy regarding Three Sixty, the company would continue to “fully comply” with all of its statutory and legal obligations to separate its wholesale and retail activities.

“A key element of this separation strategy is that Three Sixty will continue with its contract to provide, at arm’s length, all retail services to Yorkshire Water in its capacity as a non-household retailer,” the spokesperson said. “The decision to contract with Three Sixty back in April 2016 was taken, in part, to provide flexibility and options as market-opening approached.”

The news follows the surprise resignation of former Three Sixty managing director Robert Marrill in January, just four months after the business launched.

Other prominent market exits to date include Portsmouth Water – which was the first incumbent supplier to pull out of competition – as well as Southern Water and Thames Water.