Water Shadow Market Underway


The water market for businesses in England is due to deregulate in April 2017, which means that companies will be able to choose their water and wastewater supplier, opening the way to competition. Currently, only businesses that use in excess of 50ML per site are eligible to switch suppliers in England, but from next year, any business will be able to choose their retail company.

In 2008, Scotland was the first country in the world to deregulate its water market and the evidence to date indicates that customers in Scotland have achieved price reductions, service improvements, and a reduction in consumption.

Under deregulation, the water wholesaler that delivers water to the site will not change and will remain geographically determined. It is the retail company that is responsible for the billing, meter readings, and other services that can be selected. Fifteen companies have so far applied to OFWAT for a license to operate in the new market including a non-water supplier, Waterscan. Meanwhile, some water suppliers have taken the option to exit the retail market, instead choosing to focus on domestic customers. Portsmouth Water and Thames Water will pass their business customers to Castle Water, while Business Stream will look after Southern Water’s business customers. In these cases, businesses will be transferred to the new providers unless they opt to go elsewhere.

Market Operator Services Ltd (MOSL), the company established to facilitate the retail market for water, has announced the commencement of the shadow market this month, ahead of schedule. Originally due to commence on 3rd October, the shadow market will allow all suppliers and operators to carry out a rehearsal ahead of the market opening in just over six months’ time. Two companies, Welsh Water and Sutton and East Surrey Water, have completed their data uploads into the central system, and four more companies are due to finalise their uploads this week. The early commencement indicates that water companies are well-prepared for the upcoming deregulation.

Companies are advised to start collecting their water consumption data in readiness to tender for a retail supplier. While businesses have no obligation to take action when deregulation commences, they could eventually be put on to default tariffs if no action is taken and it is not yet known what these will be or how they will compare to current charges.

Water retailers can be expected to focus on improving services such as billing. Business customers will have the opportunity to opt for consolidated billing for sites around the country, which will be particularly beneficial for multi-site companies. As seen in other markets, once businesses have a greater knowledge of their consumption patterns, it often leads to improved usage management with cost saving measures being implemented.

With increasing emphasis being put on the efficient use of water and water re-use, improved billing and data provision will enable companies to monitor change in usage patterns, which in turn can feed into their CSR reporting. Business with high levels of water intensity in their production have been making headlines with their programs to address their water consumption on a global level, with Diageo, for example, recently reporting a 12.5% reduction in water consumption compared to last year.

To see how we can help you make the most of your water agreements, contact our experts today at

Nikki Wilson

Nikki joined Alfa Energy in September 2015 as a Carbon Management Consultant where she advises clients on legislation, compliance, and the implementation of carbon management schemes. She is a Practitioner member of IEMA, has a postgraduate diploma in Environmental Decision Making, and has over 15 years’ experience in energy consultancy.