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Solace blog

9th December 2016

Countdown on to English water market opening

Last month marked a major milestone in the run-up to the English water market opening. With just six months to go until every organisation and business in England is able to switch its water supplier, the ‘shadow market’ is now in operation. The advent of competition south of the border represents arguably the biggest practical and cultural shift in the sector in modern times, akin to the changes that took place with energy deregulation in the 1990s.

The shadow market is a crucial part of the preparations for full market opening in April 2017. It goes without saying that we need to trial the market processes and systems for a successful competitive environment, but we also need to test the capabilities of all market participants and their readiness from a retail and a wholesale perspective.

The plan isn’t to test all the elements of a live competitive market, but it is important that we test ‘real life’ conditions as far as possible. Following recent acquisitions and mergers, it would be useful to assess how the market infrastructure will cope with the large scale transfer of customers, which is unlikely to be stress-tested during shadow market. So the first indication we’ll have of how the market copes is immediately after it opens, when we are likely to see large volumes of customers switching. (Some of these may not be driven through customer choice but rather by
existing providers deciding they want to exit the market.)

For those of us involved in the supply of water and wastewater services, it’s crucial that we don’t lose sight of the customer during the next six months. If they are not aware of the choices on offer, many could fail to gain from the changes. There is still much work to be done to ensure that customers fully understand the choices available to them – and the benefits to be had. We must engage with these businesses, and continue to do so in the months ahead.

This will help to create the demand which will motivate suppliers to innovate and improve services for all customers – not just the large users.

Until now, the English market has operated with a captive and protected customer base, with little incentive for companies to invest in improving their customer experience. With April in sight, the shadow market will truly test how well equipped many are when it comes to retaining and winning new business. There’s still lots of work to be done, but here at Business Stream, we are genuinely excited by the opportunities ahead.

By Jo Dow, Chief Executive, Business Stream