Water competition arrives in England

In April 2017, in a bid to increase market competition, 1.2 million more non-household customers for water and sewerage services have been able to choose their supplier. Arrangements for this overhaul of national water services and its implications for the Water Fittings Regulations are outlined below.

Benefits of competition

Since privatisation of the water industry in 1989, most premises have been supplied with water and sewerage services by a local water company in their region. Only business customers using more than 5 million litres of water annually (50 million litres/year in Wales) had the option to use a different water supplier.

England followed the lead taken in 2008 by Scotland to introduce greater competition in the water supply industry. Eligible non-household premises are now able to switch suppliers of water and/or sewerage services in a similar way to switching energy suppliers. The Welsh Government is also keeping an eye on the market reforms in England and may consider changes in due course.

The potential benefits of greater competition are:-

  • lower prices
  • fewer bills and simpler tariffs -particularly forbusinesses which have multiple sites
  • improved customer service - especially through added-valueservices such as water efficiency advice.

New market organisation

Existing water and sewerage suppliers have separated their services into wholesale and retail divisions. The wholesalers will continue to own the treatment and distribution assets, producing wholesome water and treating waste water. They continue to carry out the delivery and collection of water via networks of pipes to and from customers’ property boundaries and make these services available to all retailers via published tariffs. These activities continue to be regulated by Ofwat.

Amongst other services, retailers now provide customers with billing, account handling (payments, debt management, meter readings) and answering queries. Some retailers will also provide water-efficiency services and tackle leaks on customers’ pipes. Most existing water companies have decided to offer ‘retail services’ through a separate company, with new independent retailers coming into the market to compete against them. Not all water companies have decided to take part in retail competition, with Thames Water, Southern Water and Portsmouth Water amongst those deciding not to set up a related company and completely exit the retail market.

A new body, Market Operator Services Ltd. (MOSL) has been created to deliver the core systems and processes enabling customers to switch between suppliers. MOSL publishes guides to the industry on the competition process – see their website for more information (www.mosl.co.uk/).

Who can switch and finding a new suppler

Who can switch depends upon the primary purpose of the premises and will depend on whether they are used mainly for business, rather than domestic use and whether the existing supplier is based in England. Eligible customers who wish to switch can choose from more than 35 retailers currently operating. More details and information can be found on Open Water’s website: http://www.open-water.org.uk/

New connections and customer contacts

The process for new connections is applied in a similar way to how it was previously, however there are some key differences. Now, before the premises are connected, a customer must nominate a water retailer, or one will be automatically appointed for them. Water supplied for building construction is included in the‘open market’ (so a retailer can be freely selected) irrespective of a building’s use. Retailers will have the primary relationship with customers. Wholesalers will generally not communicate directly with retail customers, but may need to for specific purposes and, have restricted access to customers’ details.

Special provisions for communication are made for matters such as water quality, water fittings and trade effluent checks and in informing customers of interruptions to services caused by wholesalers’ planned work or by unexpected incidents and emergencies.

How does this affect Water Fittings Regulations?

In contrast to most other customer-facing duties, enforcement of the Water Fittings Regulations and Byelaws is retained by the wholesaler, and the responsibilities of owners, occupiers and installers are unchanged. The wholesaler’s prior consent of plumbing proposals is still required via notification. Inspection of plumbing in new and existing premises will continue. However, in the case of planned inspections, retailers will be notified in advance and have the option of attending. Retailers will be informed about the outcome of all inspections. If anyone has queries about the water fittings regulations they can continue to contact their local water fittings enforcement team directly. Contact details for all the water fittings teams can be found on the WRAS website at wras.co.uk/contacts/water_company_contacts/.

What about households?

Households can’t switch their supplies under current arrangements and will continue to be served by their current water company. However, Ofwat has recently completed a consultation to consider whether competition may be introduced for homes in the future. It is for the government to decide whether and how to introduce competition.