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Water competition - how to make it work for you
Farmers are being urged to get switch savvy as the countdown to water competition begins. Marie-Claire Kidd finds out what the changes mean and how farmers can secure the best deal.
From April 1, 2017, all businesses, public bodies and charitable organisations in England will be able to choose their water and sewerage retailer, an option only currently available to the largest water users.
The change represents the biggest shake-up in the water industry since privatisation in 1989 and has major implications for suppliers and consumers.
For farmers, it will mean being able to negotiate a new price or service package with their existing retailer, switching to a new retailer or, if they can successfully apply for a licence, supplying themselves by dealing directly with a water wholesaler.
Farmers could benefit from lower bills, improved service and reduced water usage, leading to efficiency and environmental benefits.
Savings
Bigger companies which deal with several suppliers around the country will be able to make administrative savings by dealing with just one supplier.
Paul Hammett, water policy adviser for the NFU, said switching should not just be viewed as a cost-cutting exercise.
He said: “For some farmers, the new arrangements might be an opportunity to drive down costs, but for others, the priority might be the level of service they can expect to receive, especially when things go wrong.”
Evan Joanette, policy manager at the Consumer Council for Water, said farmers could negotiate a range of added-value services from retailers, for example, a guarantee an engineer will attend within 24 hours of a call-out, a case manager to deal with problems, or improved meter technology to help monitor and reduce water use. They could do this as individuals or by creating groups to increase their bargaining power, he said.
“Farmers are potentially going to be looking for retailers which can help them identify where meters are, where pipes are and where there might be leakage,” Mr Joanette added.
“Although these pipes are the responsibility of the farmer, some retailers could be more helpful than others when it comes to locating them.
“I can see a retailer specialising in trying to locate leaky pipes in large fields for farmers. It could potentially save customers a lot of water and a lot of money.”
Mr Hammett said some farmers would be negotiating deals for mains water and sewerage, while some would only need one of these services.
Confusion
He said: “There may be some confusion in the months ahead because many farmers will have a supply into the farmhouse and separate supply into, say, the milking parlour, and competition only applies to the non-domestic market.”
Water regulator Ofwat said the general rule was if council tax was payable on a property it fell under the domestic market, and if business rates were payable the property was non-domestic.
Mr Joanette added: “It comes down to what the primary use of the entire premises is. We anticipate working farms will likely qualify as non-domestic.”
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What can England learn from changes in Scotland?
Since the market opened to competition in Scotland in 2008, businesses and public sector organisations have saved at least £133 million in discounts and efficiencies, 24 billion litres of water and 42,000 tonnes of carbon.
Business Stream, Scotland’s largest non-domestic supplier of water and wastewater services, has launched a ‘switch fit’ guide to help businesses in England follow Scotland’s lead and make the most of the changes.
Business Stream’s checklist:
- Understand your current water usage: Previous bills will outline water usage, wastewater production and how much it is costing
- Plan ahead: Consider how changes to your organisation, such as expansion, relocation or peaks and troughs in activity, may impact your water use
- Understand your trade effluent arrangements: Make sure you are aware of your trade effluent arrangements and whether you have or need effluent consents put in place
- Consider what you want from a supplier: The opening of the market is an excellent opportunity to consider whether your current supplier is proactively helping you manage your water and wastewater needs
Visit www.business-stream.co. uk/about-us/market/get-switch- fit
What will the new market look like?
It will comprise more than 1.2 million non-household customers (which include businesses, charities and public bodies), making it the world’s largest retail water market.
Competition will encourage water suppliers to offer benefits to customers, including reduced costs, improved service levels and lower management overheads.
The move is expected to deliver about £200m of benefits to customers and the UK economy, over many decades.
Evan Joanette of the Consumer Council for Water said: “It will be similar to the energy sector, where wholesalers make energy and retailers act as an interface between them and the customer.
“Incumbent water companies will spin out retail arms, but new entrants which have never operated before could also set up as retailers. Existing energy utilities may also decide to have a go.
"Some could be national companies, but I can envisage small, specialised or local companies setting up too.
“There is nothing stopping an entrepreneurial group of farmers from setting up their own water retail company specialising in, for example, efficiency or leak detection.”
Self-supply
- Self-supply licences are currently being finalised and are expected to cost about £5,000 with annual fees due each year after. Licences can be removed in cases of breaches.
- Those who successfully apply for a licence are expected to save the retail portion – about 10 per cent – on their water bill, but they will not benefit from the customer service offered by retailers. Self-suppliers will deal directly with the water wholesaler, removing the retailer from the equation.
- The wholesaler will remain responsible for maintaining their infrastructure, whether a retailer is involved or not.
- Farms will only be able to self-supply their own premises and not other non-domestic customers.
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