Part two – an historic moment: industry reacts to water market opening
The brokers: The water retail market has now opened for all businesses, public sector organisations and charities. Utility Week asks brokers for their views on the change.
“Hundreds, if not thousands” look set to capitalise on the water market when it opens, according to Business Stream chief executive Johanna Dow. Anecdotal evidence suggests as many as two-thirds of transactions in the non-household water retail market could be intermediated, as energy brokers are set to move into water in force.
In the second of a two-part reaction to market opening series, Utility Week gauges the reaction of the utility brokers and consultants, who look set to make waves in the market.
Peter Sceats, managing director, Grand Union Water Company
“Open water is not perfect, but it is the best thing to come out of Scotland since Archie Gemill’s goal against the Dutch in the ’78 World Cup... While I fear how much of the savings due to consumers will be stolen by those hundreds of dishonest energy advisors coming into the water space, I am very optimistic for the market. There is literally nothing but upside from Open Water for businesses and charities for the next three years.”
Mike Lee, water services manager, Inprova Energy
“This is a significant step for the water market and we are excited about what the changes could mean for our clients throughout the UK. However, with the very low retail margins and various changes taking place in the supply chain, it is unclear as to how this newly competitive market will evolve. As a consultancy supporting organisations across utility procurement and management, we’d advise that businesses seek an independent review of their options before signing any retail contract for water services.”
Jon Kent, chief executive, Zeco Energy
“It’s a turbulent time in the industry as water companies are now faced with great opportunity but also great threat as new markets and new competitors arrive hand in hand. The winners will truly understand the needs of their business customers and be able to respond to them with much more agility than before.
“Services like AMR [automated meter reading] deliver real value for customers and offering these as part of a total water solution is the way to create a loyal and lucrative customer base. Water is a commodity, but data is king. AMR gives access to real-time water data so that any wastage such as leaks or poor utility management can quickly be found. Being able to take steps to save money and reduce the environmental impact is high on the corporate agenda. Being a forward-thinking water business that can understand the value of this to its customers will really set it apart from the others.”
Graham Mann, water audit expert, H2O Building Services
“I never thought this day would come, but here it is water deregulation in England, the English water retail market is open for business. The market will encourage real competition and innovation such as ‘off-grid’ water supply and driving new water saving technologies, both in water saving devices, rainwater harvesting, and water flow data collection hardware and software. Great for customers and the environment.”
Jackie Gray, director, Apollo Energy
“The initial savings from the deregulation of the water market will not be massive but there are cost efficiencies to be made and for the first time ever, they will be available to all businesses in England.
“It will enable organisations to outsource all their utility procurement and benefit from a range of value added services from third party intermediaries like ourselves. We will be able to support clients with account management but also with bureau services such as bill validation, auditing and analysis to monitor usage, deliver efficiencies and create transparency.
“For clients with multiple site locations, they can consolidate their water supplies which should stream line administration and remove the hidden costs of dealing with multiple providers.”
Chris Tarr, head of water projects, Inenco Group
“For the vast majority of businesses, water has been the forgotten utility. As consultants, we have to act as true partners across all utilities and so our role is to help businesses to navigate the new water market and make it work for them.
“We’re helping businesses to set realistic aspirations and ensure that our customers understand their consumption and consolidate their site data. We’re using our market knowledge to find the right suppliers to meet their individual needs with a focus on service as well as price. The open water market will only be a success if businesses engage in it, so we have a responsibility to demonstrate the potential financial and non-financial benefits to our customers and support them with every step of the way.”
Brendan Flattery, chief executive, Utilitywise
“Is the market really set up to give businesses a better deal, or are we heading for inertia? The regulator has some questions to answer. They must start now in reviewing their policy, so changes can be made for the next formula review or before. The allocation of costs between wholesale and retail MUST be independently assessed to ensure true cost-reflective pricing and give value back to the customer in lower prices. If not the smaller customer will be the last to benefit and yet is the most in need.”
Chris Quinn, water services commercial manager, Orchard Energy
“We are delighted that, after years of preparation and planning, the water industry in England has finally deregulated. We believe that this presents an excellent opportunity for the 1.2 million business customers in England to reduce their costs and seek an improved service, now that they have the freedom to choose their supplier.
“The period from now until the market starts to mature and settle down could be a difficult time for customers, but we believe we have a strong proposition for our customers that will ensure they make the most of what this new market has to offer. We’re eager to engage with businesses and help them understand the opportunities that water deregulation presents.”
Jenny Smith, director, Smith Bellerby
“With over 18 years’ experience in utility cost management, Smith Bellerby are looking forward to helping their clients make the most of water market de-regulation. We don’t expect clients to achieve eye-watering savings, but we are hoping to see some significant changes in billing and value-added services.
“We support clients throughout the entire tendering process – preparing accurate supply lists with all associated details required for efficient tendering; advising on any technical considerations to be included in the tender; analysing supplier offers so clients can compare quotes on a like-for-like basis and setting up appropriate billing and bill checking arrangements. We expect this to be a busy and exciting few months ahead.”
Utilities Intermediaries Association
“This is a fledgling market requiring time to establish. A measure of the market’s success will be the level of customer engagement, and that can only occur if all industry stakeholders commit to applying good ethics which are centred on the customer. Trust is easily lost but hard to recover as the gas and electricity markets can testify to.”
To coincide with the market opening, Faversham House has launched a brand new publication – Water.Retail – under the auspices of Utility Week.
This new fortnightly, high-value, newsletter-style publication will connect brokers to wholesalers, retailers and customers, and provide water retail professionals with high-value business intelligence and market insights.
- Utilitywise founder Geoff Thompson to step down from board Simon Waugh will succeed Thompson as non-executive chairman
- Pennon’s CFO to take on south west chair role at CBI Susan Davy will become a regional chair for the UK’s largest business group, early next year
- 3i Infrastructure sells stake in Anglian Water The sale to a joint venture of council pension funds is expected to generate £395 million