Uncharted Waters: Water industry competition must avoid pitfalls encountered in other sectors

INCREASED competition in the water industry must avoid the pitfalls which have caused discontent among business customers in other sectors, research carried out on behalf of the Consumer Council for Water (CCWater) has revealed.

Moves to allow all non-household customers in England the choice to switch their water and sewerage retail provider from April 2017 will deliver some of the biggest changes to the water industry since privatisation over 25 years ago.

But while business customers broadly support the idea of greater market competition, they want the water industry to learn from the problems which have affected other competitive markets, including energy and telecommunications.

In particular they want a water market which is free of cold calling and contracts which either lock customers in or rollover automatically.

Business customers also want to see the industry avoid the kind of complex tariffs which have attracted widespread criticism in the energy sector.

CCWater will now use the findings of the report – Uncharted Waters – to work with Open Water, Defra and Ofwat on the design of the new retail market so that it reflects what business customers have told us they want, while addressing their concerns.

The research also revealed some concerns about switching away from their current supplier. Many businesses would prefer to renegotiate with their current supplier, while some customers want to wait and see how the market develops before taking the plunge.

The report’s other key findings included:

  • For most business customers, the baseline satisfaction with their current water company is good, although there is concern about companies’ lack of technological innovation, account management and communication.
  • Fairness, simplicity, transparency and flexibility should be the key factors underlying the design of the competitive market.
  • Price is a big motivation for switching supplier although other important factors include the potential for a better service and reducing consumption.
  • There is a lack of awareness across all business sizes about the retail market changes in England from April 2017.
  • On balance, business customers favour market freedom over market protection but the biggest concern, and key priority, is protection from rollover contracts.

You can read the full report –  Uncharted Waters: Non-household customers’ expectations for competition in the water industry (pdf)

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