Procurement · 3 April 2017

Small business owners promised share of 200m water deregulation savings

Water deregulation
Water deregulation allows small business owners to choose a supplier outside the most local provider
Small business owners in England will benefit from a savings windfall of 200m as a result of water deregulation, according to market watchdog Ofwat.

Deregulation of the water utility market, introduced on 1 April 2017, means business owners across England can now select the water supplier that best suits their company’s needs.

The changes allow owners to buy water from outside of the local supplier, while companies based in various sites across the country will be able to use multiple water providers.

Ofwat also claimed greater competition from deregulation would drive up standards for business customers and encourage innovation.

Scotland became the first country in the world to deregulate its water market in 2008, and research suggested 100m was cut from customer bills.

In a statement, government environment secretary Andrea Leadsom welcomed water deregultation and said business owners could now find the water deal that works best for them.

opening the market is an historic milestone, paving the way for innovation and efficiency and giving customers the same choice over their water retailer as they currently have for their energy and other essential services, Leadsom said.

The new system entitles micro business owners to a seven-day cooling off? period after signing up with a new water provider, preventing suppliers from enforcing a contract. A voluntary code of conduct has also been introduced for suppliers and the Consumer Council for Water has pledged to provide support for small firms switching services.

However, research from customer consultancy Utilitywise suggested deregulation will benefit larger companies and offer little benefit to owners of small firms.

According to Utilitywise, the average small business owner will make a one-off saving of just 80.

In a statement, Utilitywise CEO Brendan Flattery urged Ofwat to deliver value to small firms through price revaluation.

the Scottish water market deregulated in 2008 with similar low margins. The regulator then had to intervene after three years, widening the retail margin to allow savings of more than 20 per cent for all businesses. Since the intervention, around 50 per cent of businesses have switched, said Flattery.

Cathryn Ross, Ofwat chief executive, argued thateventual success of water deregulation in Scotland demonstrated the potential benefits to small business owners in England.


 
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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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