New market opportunities
Adam Cooper, Senior Director – Open Water programme, Ofwat

With just over a month to go (at the time of writing) before the retail market for business, charity and public sector customers in England opens to competition, two years of hard work and planning are rapidly becoming a reality. It’s an exciting and busy year for the water sector with new opportunities in the market.

Without doubt, the sector has worked incredibly hard to make it happen; it is genuinely amazing what has been achieved since the passing of the Water Act 2014.

From the start of April, all 1.2 million eligible businesses, charities and public sector organisations in England, from the smallest charity to the largest corporate, will be able to switch their water and wastewater retailer.

The change is part of the biggest shake-up to the water industry since privatisation in 1989 and will create the largest competitive market in the world, with an estimated benefit to the UK of £200 million.

Customers are expected to benefit from lower bills, improved service and, for multi-site customers, the convenience of having just one bill as the market gains maturity and delivers improved outcomes.

Vested within that notion of maturity of a successful competitive market is the need for cultural change. As far as companies are concerned, this is true both for the newly established retail businesses and for the incumbent wholesalers. Ways of working and states of mind that were well-suited to a vertically integrated monopoly situation will, if not changed, harm customers, damage the reputation of the sector and expose companies to legal risk.

As well as opening the market, we, including Ofwat, need to open our minds to change, to develop different structures, systems and process to support and embed culture change.

To enable openness and access to information in the market, the Open Water website has been created. This website, backed by Ofwat, Defra and the market operator, MOSL, is the only impartial, customer-facing site, designed to provide guidance and information about the market and those operating in it. Providing customers with guidance which is impartial – and in a way they can understand and benefit from – is one example of a change to culture. We need to listen far more to the customer and respond to their needs and feedback in an appropriate and open way.

 As well as the market opening, there are other exciting challenges for the sector this year. We will pay particular attention to the importance of innovation in enabling companies to deliver more for less.

Sludge and biogas

Bioresources – also known as sludge – produce biogas, which can be used to generate low-carbon electricity. When processed, it can also be safely used in the agricultural sector as a fertiliser. Given the financial and environmental benefits, we want to empower markets to unleash innovation and efficiencies, rather than continuing to process themselves, if this is not the best option. This will allow water companies to find cheaper or closer destinations to process the bioresources, which could involve deals with other water companies or third parties.

We also want to encourage trading of water between companies – to enable the movement of water from where it is plentiful to where it is scarce. By setting conditions to encourage water companies to trade between themselves and with third parties, we could see a smarter use of water reserves.

By opening up markets for water resources and bioresources for customers, we are creating more scope than ever for companies to join forces with others – customers, communities, the supply chain, and others who play a role in the water cycle and in catchments – to do things in new and better ways.

www.ofwat.gov.uk