State of the market 2018-19: Review of the second year of the business retail water market

Following the opening of the business water retail market in England in April 2017, around 1.2 million business customers have been able to choose their water services retailer.

This is our review of the business retail market in its second year (2018-19). It updates and builds on our first report – Open for business.

State of market



  • Just over half (53%) of all customers are aware of the possibility to choose water retailer
  • 13% of customers have been active since market opening, in that they have switched, renegotiated or considered doing so
  • Customers have saved around £10million in bills in the second year of the market
  • Complaint levels remain much higher than before market opening. The majority of customers’ complaints concern billing and charges – which in part reflect deficiencies in market data such as timely and accurate meter readings.


Market frictions

The market frictions we identified in last year’s report continue to prevent the market from working to its full potential.

These were:

  • Wholesaler performance: Poor aggregate performance of wholesalers in meeting industry requirements increases retailer costs
  • Data quality: A lack of complete, accurate and timely market data – particularly meter reads – impedes parties’ ability to trade effectively. Poor data leads to inaccurate or disputed billing and undermines water efficiency measures.
  • Wholesaler – retailer interactions: Ineffective communication between retailers and wholesalers results in a poorer customer experience and reduces customer confidence in the market.

On the basis of evidence set out in this report it is clear that significant and urgent action is required by the sector to resolve market frictions and so enable the delivery of improved outcomes for customers. We are starting to see some progress, but resolving market frictions will require all market participants to step up and work collaboratively.

Rachel Fletcher has recently written an open letter to wholesalers noting that their overall level of support for the development of effective markets is unacceptable. This letter indicated that we expect to see a significant improvement in the coming months and will review progress in autumn 2019.

Ofwat is committed to working with the sector to make the business retail market work better for customers.  The letter notes that we will review wholesaler progress in the autumn and at that point consider what further steps may be required.


Customer insight survey

The priorities, views and experiences of customers are essential in understanding whether, and how, the market is functioning effectively and delivering for customers. One of the ways we sought to understand this is through customer research.  We appointed Opinion Research Services to undertake a representative sample of eligible customers, as well as in-depth interviews of individual customer’s experiences of the market.

Queen Mary University of London case study

Large multi-site company case study