Procurement 12 April 2017

Can water deregulation benefit my small business?

1.2m English businesses became eligible to switch water supplier on 1 April 2017

With the the biggest overhaul of Britain’s water industry in 30 years currently underway, head at utilities consultancy Utilitywise, Brendan Flattery, asks what water deregulation will mean for small firms.

The landscape has shifted for over a million small businesses across the UK this month due to the launch of water deregulation in England.

In short, water deregulation will give small business owners the opportunity to take control of their water supply by enabling them to shop for the best water deals – in a similar way to choosing an energy provider.

The freedom to choose supplier brings not just greater choice but will also deliver higher customer standards, more tailored services and, most importantly, lower prices.

This can be a win-win for small business owners. The benefits of water deregulation have already been seen in Scotland, which in 2008, became the first country in the world to offer non-domestic customers choice in water supplier.

For these reasons I welcome water deregulation. Anything that empowers over 1.2m eligible businesses in England to take control of their water provider is undoubtedly a good thing. But, to benefit fully, small business owners need to look at bundling all of their utilities together.

The good news is that customers want bundling. A recent survey from Utilitywise showed that 70 per cent of business owners in England wanted a combined energy and water proposition.

First, “bundling” gives companies greater clout in negotiating combined gas, electricity and water savings. Utilitywise estimates that small businesses will be able to save up to 14 per cent on their water bill after deregulation, but this is just the start.

By bundling all utilities together, small business owners can make cost savings of 20 per cent or more across the board, and there are some attractive cash-back deals that can add as much as £400 of additional savings. All small business owners should therefore make significant inroads into cutting utilities costs.

Bundling also opens up greater opportunities for monitoring energy and water usage on one platform. Using one smart platform, business owners can manage utilities usage directly plus educate staff to do the same.

Finally, bundling means that billing arrangements can be streamlined and simplified as you can arrange your billing through one point of contact. For “time-poor” small business owners, this is a significant benefit, while for multi-site firms, the benefits are plain.

New market entrants will likely start looking to disrupt the water market. While incumbent suppliers will look to defend market share, new entrants will adopt aggressive pricing models to establish themselves.

This may offer potential additional savings for savvy small business customers, but the levels of savings and costs are unclear at the moment.

Water deregulation is a good thing.  As ever, the greatest barrier to benefitting from deregulation is public inertia.  That’s why small business owners should be encouraged to realise the opportunities that deregulation will bring, and start to take more control over utilities and pocket welcome savings.

Brendan Flattery is CEO at independent utilities consultancy Utilitywise.

Water regulator Ofwat has promised small business owners a share of the £200m water deregulation savings.

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