How does water deregulation affect you?

Even though it’s already been almost a decade since the deregulation of the commercial water sector, its benefits arguably haven’t been particularly well-publicised. As a result, there are still countless UK organisations who haven’t made the switch. If yours is one of them, you’ll be pleased to hear that there are plenty of potential rewards to switching your business water supplier – including cost savings on your bill, better customer service, and just in general a greater peace of mind.

Many of those benefits are specifically thanks to deregulation – so here’s what you need to know.

What was the industry like before deregulation?

In a nutshell:

• Businesses water suppliers were assigned by geographic location, so businesses had no choice in their supplier.
• There was a lack of competition that meant there was no incentive for competitive prices, or the best customer service.
• Multi-site businesses often had to deal with multiple suppliers, causing unnecessary admin (and often, stress).

The English and Welsh water sectors were privatised in 1989 – which, incidentally, was the world’s first fully privatised water system. This initiative involved creating ten for-profit regional water authorities to supply households and businesses (including names you may well recognise, such as Southern Water and North West Water).

While it’s thought to have helped bring in higher levels of investment within the water industry, it also meant that businesses had no control over who supplied their water. Their local provider was the only option available, and providers set their own service levels and tariffs (which were regulated by Ofwat).

As far as customers were concerned, there were a number of flaws in this approach. While it may have helped boost investment, it also meant that there was no incentive for providers to be competitive with their pricing, or offer tailored services. Lots of organisations also complained of billing errors and poor customer services. There was a lack of forward thinking, too – water suppliers had little motivation to invest in customer-focused innovations, such as smart metering or tailored contracts.

For organisations operating in multiple locations, this system was especially frustrating. Since each site had to use the regional supplier assigned to that area, businesses were forced to deal with multiple contracts, billing systems, and customer service departments. It often created unnecessary administrative problems, and made it difficult to track and manage water costs across different sites.

However, there was finally a watershed moment (pun very much intended) in 2008, when the Scottish government deregulated its non-household water market, enabling businesses to choose their own suppliers. Within a decade, the rest of the UK followed.

What’s changed under deregulation?

Major changes introduced by deregulation:

• Businesses can now choose their water retailer rather than being stuck with a regional supplier.
• Wholesale and retail operations were separated, introducing competition into the market.
• Multi-site organisations can consolidate their billing under a single retailer.
• Retailers now offer additional services, such as efficiency advice and improved customer support.

One of the simplest ways of saying it is that deregulation brought some much-needed competition to the water market, allowing organisations to switch retailers and choose a provider that best suited their needs. It created valuable opportunities for business customers to find better deals, improved customer support, and extra benefits that were previously unavailable.

One of the biggest changes was the separation of wholesale and retail services. Before deregulation, regional water companies controlled everything – from sourcing and treating water to billing customers and handling service inquiries. This effectively meant they operated as monopolies, with no outside competition.

Under the new system:

• Regional water companies still manage wholesale operations, including sourcing, treating, and delivering water.
• Retailers handle the customer-facing side, including billing, account management, and service support, making things simpler and easier for end users.

Another significant improvement was consolidated billing, which effectively addressed the difficulties faced by businesses with multiple locations. Now, they could now work with a single retailer across all their sites, simplifying account management and potentially securing better rates based on usage volume.

So… how does this affect you?

In short, deregulation gives you more control over your water costs. With retailers competing for customers, prices are no longer dictated by a single supplier. Essentially, that means if your organisation hasn’t reviewed its water contract since deregulation, you may be paying more than you need to.

It’s not just a matter of cost, though. Theres also a renewed focus for retailers on improving their customer service, providing more efficient billing systems, and tailoring contracts to suit different business needs. If your organisation has a particularly high water usage or complex operational requirements, working with a specialist retailer can provide extra benefits, such as water efficiency advice, usage monitoring, and sustainability initiatives.

However, with a lot more choice on the market, that introduces another challenge – happily though, not necessarily a negative one. It’s called the paradox of choice; in this context, basically it means that with so many providers in the market, it can be difficult to determine which one offers the best value for your specific needs.

Thankfully, that’s where we can help here at The Business Water Shop. With a network of trusted suppliers at our disposal that spans across the UK, we’re perfectly positioned to get you the most competitive water quotes for your business. In fact, we’re able to save some customers up to 55% on their water bills, and you can count on us to use all our resources and industry expertise to get you the best deal.

It only takes a few minutes to get your online quote – so if you’re thinking about moving to switch business water suppliers, there’s never been a better time to do it!