PREMIUM: Water Market Quarterly- December 2016

Utility Week presents an executive summary of the latest quarterly report from its premium information service, Utility Week Intelligence, as the UK water market prepares for competition.

With just over three months to go until the non-domestic water retail market opens, we are beginning to get a clear sense of what the sector will look like on Monday 3 April 2017.

The final consolidatory deals are taking place, as can be seen with the bidding war going on between Severn Trent Group and Ancala for control of Dee Valley Water. A number of re-brandings have been completed, and the Scottish retailers are cementing their bases in England ahead of spring.

There are set to be 19 bona fide retailers ready to go in the English market, while more new entrants continue to apply for licences. Elsewhere, the more established players are making the last-minute adjustments to their teams in an attempt to get themselves as best prepared as possible.

Two months into the shadow operation period, everything appears to be going smoothly, with no major crises emerging from the Open Water programme and the second assurance stage passed.

Focus now turns to potential customers, with the emphasis placed on small and medium-sized enterprises (SMEs), many of which are unaware of the pending competitive market and have been disengaged from the process as a whole. This is the key area for the sector, so much so that regulator Ofwat has begun a probe into SME awareness of the Open Water programme.

Market taking shape

A number of non-domestic water retail brands have been created – such as the Severn Trent-United Utilities joint venture Water Plus. This process of preparing for competition has seen the final few incumbents set up their commercial retail arms. The latest moves have seen Pennon and South Staffordshire Group join forces to create the fourth-largest non-household retailer.

This deal will see Pennon retain an 80 per cent share in an enlarged Pennon Water Services and the operations merged in Bournemouth. South Staffordshire Group will take the remaining 20 per cent once the businesses merge in April 2017.

Furthermore, MOSL rated its own progress towards market opening at 63 per cent in April – up 1 per cent from its position in January, but significantly behind water wholesalers (71 per cent) and retailers (70 per cent).


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