Radical proposals contained in the government’s new Water White Paper would allow businesses in England, with multiple sites to choose a single water supplier for all their commercial properties. Currently companies have no option other than to receive individual bills for each site and are forced to deal with a multitude of different suppliers. Under the plans to introduce greater competition into the water sector they would be able to opt for one national bill and benefit from lower prices.
The reforms represent the biggest shake-up of the industry since privatization. If they are passed by parliament, it is expected the measures would result in a spate of mergers between companies and the emergence of new players competing for business contracts. At the moment only businesses that use an amount of water equivalent to 20 Olympic sized swimming pools at a single commercial property can switch suppliers. This has led to a situation in which one company cited in the White Paper receives 4,000 separate paper bills when it could receive a single electronic bill. It is estimated this would save the business up to £80,000 a year.
Environment minister Richard Benyon told parliament the reforms constitute a “bold vision” while a spokesman for think tank Policy Exchange has said the White Paper is good news particularly for multi-site retailers. They have also been welcomed by both Anglian Water and Severn Trent who would be free to take on business customers across the country. They would undoubtedly face completion from established commercial property water supplier Business Stream. The Scottish based company has the benefit of experience in the field as the market north of the border has been open to competition for some time.
Business Stream claims similar deregulation in England would bring significant benefits to business customers providing it has strong leadership from the regulator and there is a level playing field to ensure fair competition. Not everyone has welcomed the news however, with some MPs and industry watchers claiming that the water companies would compensate for offering lower prices to businesses by raising bills for domestic customers. Shadow environment secretary Mary Creagh described measures to protect households from picking up the bill for the changes as “weak and unclear.” However they have been welcomed by business leaders who have seen other utility costs rising sharply.
The cost to commercial properties of rising energy bills has been growing alarmingly and is forecast to continue. Chris Huhne the Energy and Climate Change Secretary has warned businesses that their energy bills are set to rise by as much as 20% by 2020 as a result of policies designed to encourage carbon reduction. Huhne concedes that the measures are damaging to business and has promised to simplify the scheme. He has also pledged to introduce measures to support those businesses that are most at risk from rising energy bills. The Confederation of British Industry (CBI) has stressed that the government needs to deliver clearer environmental policy to encourage investment in low carbon energy infrastructure. At the same time the CBI says the government has a long way to go to restore business confidence in its policy following a series of unexpected changes of direction. Businesses will be hoping the government’s measures to ease the burden of rising energy costs come to fruition. Otherwise the potential savings on water will be swallowed up by other bills.
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