How will we know if the business retail water market works?

Meerkats Sara & Joachim & Mebe

Richard Khaldi, Senior Director of Customers and Casework, explains the work that Ofwat will be doing to monitor the new business retail market opening in April 2017 – to make sure it is working for customers.

From April this year more than 1.2 million eligible businesses, charities and public sector organisations in England will be able to choose who supplies their water and wastewater retail services.

Introducing competition for businesses, charities and public sector organisations has been heralded as the biggest change to the water sector since privatisation over 25 years ago and will create the largest market of its kind in the world.

The UK Government has estimated the market will contribute about £200 million to the UK economy and bring significant environmental benefits. These include:

  • driving down prices;
  • improving water efficiency
  • encouraging innovation; and
  • improving customer service.

So what does that mean for individual customers?

Well, provided they are eligible, the smallest high street shops to the largest public authorities will be able to:

  • shop around and choose their retailer
  • renegotiate their existing deal or
  • get a licence from us to supply themselves.

That includes some of the biggest users of water: the farming, automotive, horticulture and service industries. To give you some examples:

  • for customers with multiple sites, one of the benefits might be replacing the hundreds of paper bills they receive each year with one single electronic bill – saving them time and money
  • for small- and medium-sized businesses, the benefits might include being able to benchmark themselves against other similar businesses to identify savings

But we know these benefits will only be achieved if the market is truly competitive and efficient – and is seen to be so.

So how will we know the market is working?

We know that markets and choice have delivered many good things in other sectors – from food to fashion. But we also know that in some other regulated markets, the energy and financial markets in particular, there have been problems. And we’ve learned from those experiences.

Over the last two and half years, we have worked with the UK Government and others to develop the arrangements to ensure the market works well when it opens. But after that, is it our job to protect customers by making sure the market continues to operate in their interests.

That is why we have launched our consultation on how we monitor the market. In ‘Monitoring the business retail market from April 2017: a consultation’,  we describe the monitoring framework that we plan to put in place following the market opening. Our framework will ensure that we:

  • understand whether the market is working well
  • can intervene in an appropriate way should it not be the case.

We also discuss how we plan to make information about the market more widely available so that customers and others can have confidence in how the market it is working.

We would welcome your views to the consultation by 10 February 2017.  If you just want the highlights of what we’re planning, not the detail, then you can watch me on YouTube.

Finally, you can find more information about the market itself at open-water.org.uk.