The Secretary of State for the Environment recently confirmed that the new retail water market for business, charities and public sector customers will open, as planned, on 1 April 2017. This will be the biggest change in the water industry, arguably since privatisation, as it sees all non-household consumers in England being able to choose and switch their water supplier without being required to use a minimum amount of water (as is currently the case).
There are currently 21 licensed retailers in the new market, with more expected to join.
Recent key milestones
There has been a significant amount of activity in the run-up to market opening. The market code documents, which are designed to be the blueprint for how the industry will work, have now been published. These include:
- The Wholesale Retail Code – the statutory code which sets out the business terms, market terms and operational terms that will apply to all arrangements between a wholesaler (who collects, cleans and provides the water and sewerage services) and a licensed retailer.
- The Market Arrangements Code (MAC) – a non-statutory code which sets out the arrangements to establish a market operator and setting up a panel to oversee the codes and any changes to these (among other things).
Ofwat (the water and sewerage regulator) held an event on 8 March 2017 at which appointed water and wastewater companies and water supply and sewerage licensees signed the Market Arrangements Code Framework Agreement. This ensures that the parties accede to the MAC and it becomes binding and enforceable between all wholesalers, retailers and the Market Operator (Market Operator Services Ltd).
Ofwat has also been focused on increasing customer engagement and awareness in the new market, holding two regional stakeholder workshops already with further workshops planned throughout March. The final workshop (in London on 27 March) is specifically for the construction industry. It is believed that these workshops alone will have reached organisations representing more than half a million business, charity and public sector customers.
What changes will water customers see?
We anticipate that while the prices that customers see offered by different retailers in the new market may not differ drastically from the current bills they face, the 'value added services' and/or additional services that retailers provide will become distinguishing factors between the different retailers in the new market, with any financial benefits likely to become apparent over the longer-term.
How can Burges Salmon help?
Our dedicated water team has expert insight into the industry gained through our work for the regulators and within the industry itself. If you have any questions about the scope and impact of the regulatory change associated with the new open water market, please contact us.