Towards a more competitive water market

Richard Williams

As the UK government’s new Water Bill starts its journey towards probable enactment in 2014 and implementation three years later, it’s time to start considering how the water industry will need to adapt.

The new bill aims to continue the process of opening up the water market to increased competition, by giving all non-domestic customers the right to choose their water and sewerage retailer. Although the details are still very much open to discussion, and the cross-industry Open Water Programme is currently debating how this will work in practice, we can already predict some of the outcomes by looking at the effects that similar reforms have had on the UK electricity and gas markets.

Most importantly, the fact that water companies will need to compete for their share of approximately 1.2 million non-domestic customer accounts means that we can expect to see fundamental changes in the way the market operates. A new network of water retailers and wholesalers will arise, and will have to find efficient ways to compete and collaborate.

It is also a near-certainty that once customers have the right to choose who to buy their water from, suppliers will need to put new business processes in place.

For example, it will be necessary to create and maintain a full register of supply and service points, so that retailers and wholesalers know where their customers are and how they are connected to the water supply. There will also be a need to apportion and distribute monies between retailers and wholesalers, based on the services they have provided to each customer. And of course, a standardised method of transferring customers from one supplier to another will be required.

In all these cases, the key issue is the ability to exchange data within and between companies effectively. In the energy sector, despite the fact that the market was opened to competition a number of years ago, the evolution of inter-company dataflows has been a slow and often painful process. The water industry would do well to take heed of the lessons that energy companies have learned in order to avoid making the same mistakes.

Fortunately, the challenge faced by the water industry is not quite on the same scale: the current Water Bill will only create 1.2 million new non-domestic customers, rather than the tens of millions of households and businesses that energy companies need to deal with. Nevertheless, the same types of systems and processes will need to be put in place – so it’s important for the water industry to work closely with experienced technology vendors to understand how the current generation of dataflow management solutions can be adapted to meet its unique requirements.

Overall, although the transformation may be challenging in the short term, there are significant opportunities for forward-thinking water companies that recognise the potential for operational cost-savings, better customer service and simpler compliance. AMT-SYBEX has helped our energy customers meet similar challenges since 1996 and are already exploring with our clients in the water sector how they might best take control of their dataflows, gain competitive advantage, and compete for a larger share of this valuable new market.

For more information about our work with water clients, click here »

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