Untapped potential: Ofwat reviews first year of the business retail water market
The business retail water market is off the ground, but not yet in full flow, according to a new report from regulator Ofwat. The first in-depth review of the non-household retail water market, which opened in April 2017, has found that greater choice and competition is delivering clear benefits for many customers who have switched provider or renegotiated their current deal. These customers have collectively saved around £8 million on their bills and up to 540 million litres of water. Customers have also saved time as a result of simplified billing.
However, smaller business customers are less aware and interested in the market and so many may be missing out on the benefits the new market can offer. Ofwat has identified a number of issues which are impeding the market from working to its full potential for customers, including:
- Poor interaction between wholesalers and retailers, which is needed to ensure key functions of the market work as smoothly as possible and that customers receive the best experience possible;
- A lack of complete, accurate and timely market and customer data, resulting in, for instance, inaccurate or late meter readings which can lead to switching being delayed; and,
- Poor performance by wholesalers to deliver good customer outcomes – overall, wholesalers completed only two thirds of their required tasks such as meter reads on time, leading to knock-on impacts for retailers and customers, including late or inaccurate billing.
Wholesalers, retailers and the market operator MOSL all have a key role to play in addressing these challenges and working together, they can ensure that we have a well-functioning market with customers at its heart.
For its part, Ofwat will continue to take forward a range of work including its review of price protections and exploring what more can be done to encourage wholesalers to meet their obligations to support efficient market functioning.
Ofwat’s Senior Director for Customers and Casework, Emma Kelso said:
“A year on from opening up the business retail water market, we’ve taken the first in-depth look at how that market has performed for its customers, to find out what is working and what isn’t. While many customers are starting to save money, time and water as a result of switching or renegotiating, other customers have yet to benefit as much as they could.
It’s clear from our report that there is still much untapped potential in this market. For instance, our survey of customers reveals that many are interested in a range of new services including around water efficiency.
By addressing the challenges we’ve identified around data quality, the performance of wholesalers and the vital relationship between wholesalers and retailers, we will have a market delivering to its full potential with, at its heart, customers who are aware of the options available and who feel able and empowered to participate”.