The retail water market reached a milestone of 100,000 supply points switched during February 2018, ten months after it opened. Could the landmark figure signal a turning point in a disappointing first year for competition?
When the non-domestic water market in England opened up to competition for the first time in April 2017, you’d be forgiven for thinking that there’d be a flood of business customers rushing to switch their water contract in search of a better deal.
After all, the aim of introducing competition to the market was to offer customers greater options for their water services, allowing them to negotiate with retailers regarding price and choose packages better suited to their needs.
Despite this premise, however, the water market has struggled to find to find its flow in terms of getting consumers to participate.
Though a first real market milestone was reached in February 2018, with market operator MOSL confirming that 100,000 water supply points switched during the first ten months, the reality is that the consumer attitude to the market has remained somewhat lukewarm. Indeed 100,000 switches equates to just 3.8% of the total 2.7 million supply points eligible.
So why are so many business still not tapping the benefits of the open water market?
Awareness and customer service issues
In reaction to MOSL’s Q3 report in January, the Consumer Council for Water (CCWater) emphasised the need for water retailers to make small- and medium-sized companies (SMEs) in particular more aware of the potential benefits by providing “greater clarity over their price and service offerings.”
With a higher ratio of large water consumers currently switching than SMEs, regulator Ofwat has itself underlined that retailers need to work harder to ensure customers are well informed, especially in the case of smaller businesses.
Encouragement to build awareness also came off the back of a growing number of consumer complaints during 2016/17.
According to a CCWater report, many businesses claimed they had struggled to find information regarding retailers and their tariffs, making it much harder for those who had contemplated switching to easily compare offers.
While such issues have been attributed to teething problems expected of a new market, general low awareness and a lack of customer service from suppliers has seemingly deterred customers from switching in larger numbers.
What’s the good news?
Despite competition not yet having the impact on the non-domestic water market that many would have hoped, Ofwat has suggested that MOSL’s most recent figures are “promising” given that switching rates are gradually increasing.
However the regulator said it would continue to monitor the market, assuring that it would continue working with industry to ensure that the “business water market works efficiently and remains fit for the future.”
As part of this process, Ofwat is performing a retail market price review (PR19) to be published late next year and coming into effect during 2020. In a move to be welcomed, the revised methodology is incentivising innovation, greater resilience and improved customer service amongst UK water companies.
MOSL, meanwhile, is 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 the central market operating system.
Evidently, there are some positive steps being taken by the industry towards facilitating a better marketplace from which consumers can more widely enjoy the benefits.
How can businesses benefit in the meantime?
Though the open water market has endured a rocky start, the golden opportunity to make savings on your water bills thanks to the introduction of competition remains there for the taking.
Indeed businesses that have already taken advantage of the open water market by agreeing to improved contractual terms – either through negotiating with their current supplier or by going to a competitor – are now broadly enjoying the benefits of lower bills and better conditions as a result.
Just as we do for our many satisfied customers in reducing energy price risk, we can help you choose the best water supplier and most suitable contract based on your business’ individual requirements, guiding you through the process from start to finish.
After undertaking a competitive tender and full analysis of supplier offerings, we provide you with a full overview and completely impartial advice, while our bill validation team provide you with the added confidence that once you are on your new contract, you’ll only pay for what exactly what you should be.