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February 2017
A refreshing new approach to water for the public sector
SPECiAL REPORT:
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WATER DEREGULATION What does it mean for the public sector?
08/02/2017 12:0
Special Report - news
Stay ahead of the tide of water deregulation
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pril 2017 brings with it the biggest reformation of the water industry in living memory. Currently, non-domestic users are only able to use their local supplier for all of their water needs, irrespective of the level of service they are receiving. Post April the water market will become deregulated, allowing businesses, charities and public sector organisations the freedom to select the water supplier that best fits their needs. Whilst this change has been on the cards for a long time, Richard Roberts, Account Manager at IMServ Europe Limited, believes that some businesses are making the mistake of waiting until the deadline before securing their new water contract. By seeking timely advice now, companies can secure the best deal available to them, before the big rush to make the switch next year. “We’ve seen the success of water deregulation in Scotland already, with some companies reporting savings of up to 30% on their water bills,” commented Richard. “However, some companies are lagging behind their competition and holding back
on signing on the dotted line. These businesses may find themselves scrabbling for a favourable deal come April and accepting a contract which is not necessarily the best fit for them.” In order to prepare businesses and suppliers alike, Market Operator Service Limited (MOSL) is running a ‘Shadow Market’ in the run up to deregulation in April. MOSL’s role is to deliver the operational capabilities required to support the running of the deregulated market. The Shadow Market is a transition phase and will simulate live services to allow systems, processes and data collection to be trialled without commercial risk. Deregulation is coming regardless of whether companies actively choose to take part in the Shadow Market or not. Companies that don’t prepare, or choose not to review their water supplier, may find themselves automatically migrated onto a service which is unsuitable for their business. Additionally, as some operators are leaving the market altogether, some businesses may find that they are passed onto a service provider not of their choosing. IMServ, one of the UK’s largest energy and data management providers, has been offering water efficiency services as part of
its portfolio for some time. It has been encouraging its customers to make the most of the Shadow Market, so that they can test the systems and processes which will come into force with deregulation. Richard continued: “Although it is still too early to determine the long-term success that water deregulation will have on the UK market, the Shadow Market is off to a promising start. The true benefit that businesses are reaping by taking part is the freedom to test out processes and systems without commercial consequences. Water companies are able to trial how meter readings will work, experiment with tariff changes and switch suppliers, but no money will be transferred during this period as contracts will not commence until April 2017.” “Although April may feel like it’s just around the corner, there is still plenty of time for those offering water services to ensure their customers experience smooth sailing during the switch. Ultimately, the Shadow Market is a chance for the main participants to reassure themselves that the UK water market is prepared for this change, has looked at the effect that deregulation has had on the Scottish market and taken learnings from the process”. www.imserv.com
Ofwat sets out plans for monitoring the business retail water market
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fwat has warned it would be closely watching water retailers when the market opens for 1.2 million business, charity and public sector organisations. And it will not hesitate to take action right from the start if it sees misconduct. From April this year, eligible business customers in England will be able to choose who they pay for their water and wastewater retail services The UK Government has estimated the market will contribute around £200 million to the UK economy and to bring significant environmental benefits. However, these benefits will be achieved only if the market is truly competitive and efficient, with all retailers giving clear advice to customers about the opportunities to switch tariffs or suppliers. Having learnt from experiences of other regulated markets, the energy and financial markets in particular, Ofwat has applied them to its monitoring and intervention approach.
Ofwat senior director Richard Khaldi says: “Introducing choice for businesses, charities and public sector organisations is the biggest change to the water sector since its privatisation more than 25 years ago. This will create the biggest competitive water market in the world. “We want to ensure this market operates well and protection is in place to build customer trust and confidence. And we will not hesitate to take action right from the start if we see customers being missold or mislead. “The new market offers opportunities to help you get a better deal as a customer, such as combining multiple sites into one electronic water bill or having a combined utilities provider, potentially saving money and time. If you are a small to medium sized enterprise (SME) or high street business, you can benchmark what other companies and businesses of your size in your sector are doing, which could help you save money and also save water, which is great for the environment.
EM Special Report - Water deregulation • february 2017
“But with opportunity there are risks, which is why we want to ensure all customers have choice and know how to exercise that choice, so they can make informed and considered decisions.” Ofwat plans to get a full picture of the new market by using several different methods including water retail company reports, the experience of customers and water retailers, any complaints it receives, market research and proactive checks. It will consider intervening where there is a risk to the effective operation of the market or where there may be significant detriment to customers. Ofwat is now asking for people to have a say on the consultation it has launched about how it monitors the market and ensure customers are protected. The consultation closes on 10 February. You can read the consultation on our website and give your feedback via email to marketmonitoringconsultation@ ofwat.gsi.gov.uk
Special Report - news
SUEZ signs national partnership with Castle Water to deliver specialist industrial water and wastewater services
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UEZ in the UK, for its activities in industrial water solutions, has signed a National Framework Agreement with Castle Water, the UK’s largest independent water retailer, for the delivery of specialist industrial water and wastewater services. The new partnership will see Castle Water benefiting from SUEZ’s long experience in water and wastewater management to make the most of the considerable opportunities presented by the deregulation of the water market, which comes into play in England next year. From April 2017, commercial water users in England will be able to choose their water supplier – more specifically their water retailer – allowing more flexibility and encouraging businesses to re-evaluate their entire water cycle. This new partnership will enable Castle Water’s customers to access SUEZ’s complete range of market leading technologies, services and chemistry for the purification, treatment and management of water and wastewater. The availability of these specialist services provides businesses using industrial water with the tools needed to improve efficiencies, and
ensure they are managing water resources cost effectively and sustainably. David Reeve, CEO for SUEZ Industry UK France, said: “We are delighted to work in partnership and to deliver our specialist services to Castle Water’s business customers across the UK. SUEZ Treatment Solutions UK provides solutions to help customers secure, operate and maintain their water and effluent systems. We use our expertise to diagnose process related performance, highlight areas that could be optimised and deliver cost efficiencies as well as ensuring that organisations can meet environmental obligations. In doing so, we can provide peace of mind for Castle Water customers, enabling them to tackle the three biggest challenges that they face: cost, performance and environmental management.” Castle Water Chief Executive, John Reynolds OBE, said: “I’m delighted to announce our framework agreement with SUEZ. A dedicated water retailer, Castle Water has grown very quickly to become the UK’s largest independent water company. We now serve customers across all industries and work with a range of organisations with very specific technical
support needs. Our aim is to provide innovative, proactive solutions that reassure and help these customers meet their day-to-day operational challenges as well build their capability for the future. Like us, SUEZ have a proven track record of solving issues and delivering savings for customers. There is a great synergy between our two companies. As the UK’s leading industrial water services and solutions experts, SUEZ join with us in delivering the optimal mix of insight, knowledge, skills and resources to meet our customers’ needs nationwide.” www.sueztreatmentsolutions.co.uk www.castlewater.co.uk
WATERSCAN LAUNCHES PIONEERING WATER SELF-SUPPLY SERVICE AHEAD OF MARKET OPENING
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ndependent water consultancy Waterscan has secured a Water Supply and Sewerage Licence (WSSL) to bring a new water procurement approach to the marketplace. The company’s pioneering ‘self-supply’ service will give non-household customers complete control over their water consumption and cost; enable greater savings by paying direct wholesale costs, ensure billing accuracy at source and, as a market participant, influence the marketplace – all with Waterscan’s full and independent support. Neil Pendle, Managing Director at Waterscan, said: “Our focus remains, as always, to drive innovative ways to reduce our clients’ water consumption and costs. Holding a WSSL will support us in maximising the many opportunities that the open market presents for our clients while ensuring that we continue to provide the most complete, independent water consultancy service in the UK. Being able to offer self-supply, in addition to our existing
procurement service, strengthens our ability to deliver our core values - save water, save cost and create value throughout the supply chain.” With this inventive new service, Waterscan will have unprecedented real-time market intelligence to use for its customers’ benefit. By cleverly integrating its existing comprehensive Waterline© software system with the Central Market Operating System (CMOS), the company now has the unique capability to supply and receive accurate client data and to interrogate wider market data to drive savings. Furthermore, it can offer a genuine national service which will package up services across England, Scotland, Wales and Northern Ireland, creating efficiencies across all multi-site operations. Importantly, focusing on supporting clients with its self-supply or procurement tendering services, the company’s independent, customer-focused approach is retained. The implementation of strict confidentiality controls that have been
approved by Ofwat further reinforce this position. These will see the formation of separate departments, ensuring that tender information is only accessible to clients and their assigned Waterscan procurement team. Benefits across the whole marketplace are expected; as Pendle goes on to explain: “Our ground-breaking and multi-faceted approach to water procurement will drive the market on many levels. Self-supply customers and Waterscan can together play a big part in pushing wholesale charges down. And, with direct access to market data, we can build tailored evidence-based water efficiency strategies to help clients achieve their corporate social responsibility goals, ultimately creating further opportunities for investment in infrastructure and sustainability initiatives.” To find out call 01243 839 880 or visit www.waterscan.com
EM Special Report - Water deregulation • february 2017
Special Report - News
Businesses in the dark about water retail competition, survey reveals
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wo-thirds of organisations remain unaware of imminent changes to the water market which will allow all non-domestic water users in England to switch suppliers of their water retail services. Water retail services refer to all of the ‘before-the-meter’ activities such as selling the water and billing customers for it That’s according to a new survey carried out by market regulator Ofwat, which is overseeing the launch of water retail competition in April. It reveals that just 32% of firms are aware about the forthcoming changes, with the remaining 68% having not heard about them at all. Those in the construction, retail, financial & insurance and public administration & defence sectors are significantly less likely to be aware of the upcoming changes according to the survey, which questioned 1,000 organisations of all sizes across England. “Eligible customers – whether they are a hospital, local council, florist, factory or farmer – can, for the first time, choose the water services supplier to suit their needs,” said Ofwat chief executive Cathryn Ross. “This is a real opportunity for these customers, but first they need to know more about the new market. Then they can use that knowledge to make an informed choice. It’s for these reasons Ofwat is working with partners and the water sector to launch an important awareness campaign next week.”
Scottish success Water retail services refer to all customer-facing activities such as selling the water, billing customers for it, and dealing with any related enquiries. This is distinct from the ‘wholesale’ activities which cover everything up to the meter such as sourcing, transporting and treating water and wastewater. Competition for water retail competition is due to commence in England on 1 April 2017. In practice, this means that around 1.2 million businesses, charities and public-sector organisations across the country – no matter their size or level of water consumption – will be able to choose their provider of water and wastewater retail services, as they are for their energy supply. Much of the structure and processes of England’s competitive water retail market will replicate those seen in Scotland, where the 2008 introduction of non-domestic retail competition has broadly been a success. The Department for Environment, Food and Rural Affairs (Defra) – which is working with Ofwat to oversee the delivery of water retail competition in England – expects water retail competition to deliver around £200m in benefits for the UK economy. To be eligible to switch supplier, an organisation must operate from a business premises, pay business rates, and not use a household water supply. From Ofwat’s survey, it can be estimated that just over half (53%) of all organisations in England will be eligible to switch water retail
services. This reflects the fact that most organisations in the overall population are micro businesses, about half of which are eligible (51%).
‘Right direction’ Whether or not eligible organisations will actually switch come market opening is another question: more than half (52%) of organisations surveyed by Ofwat said they would consider switching who supplies their water retail services when the market opens, with financial savings cited as the top influencing factor for switching. Around a quarter of respondents (26%) said they are unsure whether they will switch or not, while the remaining fifth (21%) said they would not consider switching. Commenting on the survey’s findings, Tony Smith, chief executive of customer representative the Consumer Council for Water, said: “Awareness of the new non-household retail water market appears to be heading in the right direction, having been as low as 8% almost a year ago when we carried out our own customer research - that has now risen to one-third of customers.” “But the job is not done, with two-thirds of eligible customers still oblivious to the changes and at risk of missing out on the potential benefits. With less than three months to go, our challenge to the industry is to ensure the majority of customers in England know about the new market. We want to see a vibrant marketplace where customers are well-informed about the choices they can make.” www.edie.net
SPECIAL REPORT APRIL 2017 The next special report on water management will be published in April 2017 To reserve your space, please contact Ralph Scrivens: 01933 316931 ralph@energymanagermagazine.co.uk
Special Report - NEWS
England’s water market prepares for further deregulation
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ngland’s water market for business customers will undergo further deregulation from April this year, enabling companies of all sizes to benefit from more competition and lower costs, as Nick Simpson, Marketing Director at SUEZ Water UK, explains. Business owners across England could soon benefit from lower bills by switching water providers and buying water from other than their local supplier. In the same way that energy users can choose their supplier, so this will soon apply to most commercial water users in England. From April, the market for supplying water to businesses in England will be further deregulated, bringing it into line with current arrangements in Scotland. England actually introduced competition for water services way back in 2003. Commercial customers using more than 50 megalitres of water per year were able to switch suppliers in the same way that many businesses shop around for gas and electricity. However, this Water Supply Licensing programme was limited in scope and did not introduce realistic financial incentives – or a suitable market structure – to create true competition. Despite later reducing the threshold to 5 megalitres per year, the same basic restraints continued to apply to the market, meaning that the same problems persisted: non-standardised billing, complex tariffs, low levels of customer satisfaction and the high cost of handling transactions across multiple sites. In Scotland, the water market has been fully deregulated since 2008, creating estimated efficiency savings of over £43 million and saving around 20 billion litres of water. Around 42 percent of Scottish businesses have taken the opportunity to renegotiate their water and sewerage contracts. Scotland’s 130,000 non-domestic customers can choose between 18 retail suppliers or ‘Licensed Providers’ of water. Each purchases water and/or sewerage services at wholesale prices from Scottish Water, which remains responsible for maintaining the publically owned water supply and waste infrastructures. The success of water deregulation in Scotland led the Government to propose a similar scheme in England (removing the
current consumption threshold completely), and in 2009 the independent Cave Review of competition and innovation in water markets final report was published. The Water Bill was subsequently published by DEFRA in 2013 and passed by Act of Parliament in 2014. In anticipation of the changes, many of the water companies have established licenced water retail supply businesses, either directly owned, joint-owned or in partnership with specialised providers. In each case, contact is being made with business customers to advise them of the changes. Courtesy of the Water Act 2014, all non-domestic business customers – plus public sector, charitable and not-for-profit organisations in England – will have the flexibility to choose their supplier of water and sewage services, regardless of where they are located in the country. With around one million eligible companies, the English market is around eight times larger than that in Scotland. In principle, further deregulation could help companies cut their water costs by eliminating inefficiencies, reducing the complexity of sourcing across multiple sites, and providing single billing rather than multiple billing from different regional suppliers. In reality, the situation has actually become a little more complex before its intended benefits can eventually be realised, as many industrial and commercial organisations have been temporarily diverted from their core activities ahead of the deadline. In simple terms, deregulation should allow businesses to reduce the cost of water and sewage services, either through renegotiation with an existing supplier or by transferring to a new one. In practice, there are likely to be some teething problems. For example, some companies that operate from multiple sites around the country, particularly those receiving water from different local suppliers (or that have premises where the definition of household and non-household is unclear) might experience problems. There is also a risk that pricing structures actually become more complex, rather than more transparent. Different water retailers may have varying margins for different customer groups or volume users, for example, which may make it difficult for all customers to negotiate
worthwhile discounts. For many customers, price will only be part of their requirement. They may, for example, place equal or greater value on factors such as single billing for multiple sites, flow monitoring, security of supply, greater water efficiency, enhanced customer or water hygiene services or carbon reduction. To take advantage of the potential savings, non-domestic water users in England should now be developing strategies for managing vital water and wastewater services; however, this is not often seen as a core activity. And in the run-up to the 2017 deadline, essential activities such as negotiating the best deal and managing this on an on-going basis, has added to overall costs. One answer may be to outsource responsibility for water and wastewater treatment – and factors such as cost negotiations – to an industry expert such as SUEZ Water UK. In many respects, this type of outsourcing is no different to that of many other non-core business services such as warehousing, IT or payroll. Ultimately, such an arrangement would help a company to focus exclusively on its core business, while reducing the cost, risk and complexity of managing its water and wastewater systems. For more information visit www.suezwater.co.uk/ industrial-water-retail/
EM Special Report - Water deregulation • february 2017
Special Report - Cover Story
Watershed moment approaches for the public sector The 1st of April 2017 marks a significant change in the world of water. From this date, organisations of all shapes and sizes, including many in the public sector, will be able to switch water supplier in England for the first time – one of the biggest reforms of a UK market in recent years. It’s undoubtedly a watershed moment for energy managers, procurement teams and facilities professionals across the country. For many, it will be a completely new experience. Currently, the vast majority of organisations have to procure their water services from the incumbent provider for each region where they have operations; potentially as many as 21 different suppliers.
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he existing system has created a great deal of duplication and inefficiency for customers.” Explains Tony McHardy, Corporate Director at Water Plus, the largest non-domestic water supplier in the UK – see ‘About Water Plus’. “Any businesses with sites spread across the country could be dealing with anything up to 21 different water suppliers. That means dozens of sets of paperwork and dozens of different points of contact, just for starters – there are plenty of other examples. “The good news is the introduction of competition will give companies, public sector organisations, and charities the ability to do something about that. From April, they’ll be able to consolidate all of their sites with one water supplier, along with a host of other benefits including water efficiency solutions, contingency planning, smart metering, consumption data feeding into energy management systems, water audits, benchmarking and alerts, which will
Tony McHardy, Corporate Director, Water Plus
bring about, cost, time and consumption savings for customers. Customers will finally have a choice and will be able to select a supplier that best matches their desired company values or business needs.”
The Role of Wholesalers and Retailers As part of the new market structure one of the biggest changes will be the separation of wholesale and retail functions into separate entities, operating on an ‘arm’s length’ basis. The wholesalers, will continue to be responsible for the ongoing maintenance and investment into the main water and waste water networks and fiscal metering. The availability and provision of the water supplied to a customer’s boundary along with compliance to the strict water quality standard will also continue to be within their remit. It will be to a large degree, a continuation of many of their previous tasks. They will continue to be operate on a regional basis.
About Water Plus Water Plus is a joint venture between two of the largest water suppliers in the UK: Severn Trent and United Utilities. The company brings together the best of both organisations to offer the value and a personal, modern, and enhanced service that business customers expect. The business is based in Stoke-on-Trent, in Staffordshire.
EM Special Report - Water deregulation • february 2017
Retailers, on the other hand, will take over the customer service elements of the service. They will issue customers with bills for their water and wastewater services and some will provide a range of additional support, predominantly around helping organisations cut water costs and enhance efficiency. In many cases, a retailer may also act as a representative for the customer in negotiations with the wholesaler. However, the crucial bit is that customers will be able to choose their retailer, driving competition and a range of additional benefits.
The Benefits of Competition With retailers forced to compete, customers should benefit from keener pricing, product innovation, and customer service improvements as suppliers aim to carve out their own segments in the market and retain and win more business. For the most part, that will mean offering something new or improved in billing, data reporting, account management, and value added services around water efficiency and water management.
Switching Considerations So, with such a big change on the horizon and a range of new suppliers and services to choose from, what should public sector organisations be doing now? Is there anything they need to bear in mind ahead of April’s big launch?
Special Report - Cover Story “One of the most important lessons that came out of Scotland’s experience was the need for preparation. Customers need to get ready if they’re to make the most of this opportunity,” advises McHardy. “Of course, they’ll still get water from the wholesaler on April 1 but they’ll soon be dealing with their incumbent retailer on billing issues and the like – the processes are going to change slightly and a number of steps need to be taken. McHardy suggests that prior to April’s water deregulation organisations prepare themselves by following these simple practices:
“Competition opens up huge possibilities for the public sector to cut costs, reduce water use, and drive sustainability.” - Tony McHardy, Corporate Director, Water Plus
Data Ready “Firstly, public sector organisations need to ensure their data is in order. That means understanding their entire portfolio of sites; checking that they aren’t paying for properties they don’t own; and ensuring that the data covers all of their current sites, with each site having its own unique Supply Point Identification Number (SPID). It’s also a good idea to check current water consumption at each site and consider future requirements – that way you’ll have the information you need should you want to compare prices from retailers.” “We understand that organisations may need help with their data and at Water Plus we take a personal approach. We’ll work with customers to get a clear view on their portfolio and their consumption. We’ll review, cleanse and often enrich their information – identifying wrongly categorised sites or sites on incorrect bandings or tariffs.”
Contract Ready “The next step is to make sure you are contractually ready to switch. Make sure your details are up to date and the correct governance procedures are in place to be able to sign off on a water supply contract from your chosen retailer – there could be a number of conversations to be had internally and processes to change in advance of letting any contract.
Service Ready “Customers need to think about what’s important to their business. What services are essential and what value added services could make a real difference? Do you have any sustainability standards or targets to meet? How can you get staff on-board with water efficiency? There are a number of different water efficiency solutions available, with one of the most popular for public sector organisations being the use of
smart meters. If utilised correctly these can be a fantastic tool to understand consumption levels, costs, areas that are over consuming and where you can identify leaks and reduce water. It’s also possible to have data exported directly into energy management systems or specialist smart metering apps, however this will again vary between competing retailers. It’s also important to check your billing and service requirements. If consolidated billing is important for your organisation, ensure you check it’s provided in the output format you require. As this is an area where some retailers are coming unstuck. To get the most out of your retailer, do your research, and ensure that you’re aligning yourself to a retailer who is best placed to help you reach your goals.”
Understand the English Water Market “Another point to consider is the difference in the margin that’s likely to be available in England – it’s not as large as it is in Scotland, meaning there’s less opportunity for retailers to pass on discounts. This will mean working with your retailer and looking at different ways to save time, save money or reduce your consumption. Areas for savings include water efficiency equipment for reducing your water usage, consolidated billing to reduce time and resources, identifying leaks to eliminate wastage and reviewing and benchmarking data so you can keep in control. “We’re working with our customers to give them the information they need ahead of April and get them ready for the big changes ahead. Although there are still some details to be ironed out, what’s certain is that it’s an exciting time for both the industry and the public sector.
Competition presents a brilliant opportunity for public services to review their needs and get the best value for money from their water suppliers. Taking the right steps now will be crucial to realising the benefits.” www.water-plus.co.uk
Are you switch ready? Understanding how you use water is absolutely critical to making sure you’re ready to switch. To get the full picture Water Plus recommends you get data ready, contract ready, and service ready by: 1. Checking your portfolio is up to date, including information about all of the connected services and tariffs 2. Knowing how many sites you have, the consumption for each one, and the location of the meters 3. Looking at your likely future consumption requirements, as well as your current use 4. Thinking about what services and support processes are important to you 5. Ensuring you have the right governance in place that allows you to switch supplier
EM Special Report - Water deregulation • february 2017
Special Report
A VIEW OF WATER DEREGULATION -
GRAND UNION WATER Co.
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ater supply to businesses and charities goes competitive in April 2017. The UK Water Act 2014 established the framework to create a market that will allow millions of businesses and charities (based mainly in England) to choose their supplier of water & waste-water retail services via the new competitive market. In Wales only consumers with a usage of 50,000 M3 a year can switch supplier.” “The UK competitive water market actually started in Scotland and the change to the water market in England is largely an extension of the pioneering Scottish pilot phase.” “Business and charity consumers have opportunity to reclaim billing overcharge, reduce consumption, reduce the cost of water & waste-water services, and have consolidated billing, or in other words one bill for multi- site consumers.” “MOSL (the government owned company that will operate the market between the water companies and the new water retailers who will face the consumer) has been working away making sure the systems that facilitate supplier-switching are ready and the market will start smoothly.” “Competition at the point of delivery for water services has undoubtedly been a long time coming, and while not as far reaching as it could have been, the updating of the water market is—make no mistake—the biggest news in the utility and procurement space in decades with the UK (not to say Scotland) leading the world.” “In the first phase of the Scottish market, consumers made annual savings of anywhere between 2.5% and 12.5%. When the English fully market opens, multiple water & waste-water companies could be competing for consumer’s business, albeit on thinner English margins. It is reasonable to assume savings will be forthcoming, but an exact quote cannot be specifically forecasted at this point. It is not unreasonable to think that savings made thru lower water rates could be doubled or significantly amplified by accompanying consumption reduction measures.”
“Water Procurement Advisory space will NOT be regulated by Ofwat, just as Energy Advisory is NOT regulated by Ofgem. The lack of regulation of Energy Advisors has caused both poor and sharp practice to occur with limited recourse for business consumers. The complexity of energy offers is used by some Advisors to extract unfair value from transactions they intermediate. And while there were moves to regulate energy advisors they were abandoned by Ofgem. Water consumers will therefore be exposed to both the good and bad sides of the energy advisors as they move into water, some of them deploying the same
cold calling, sharp and poor practice that exists in the energy market.” “In the absence of proper regulation, the water procurement advisory space needs to regulate itself and demonstrate the highest possible level of ethics and integrity.” “Grand Union Water Co. with support from a working peer and several major consumers shaped a deliberately simple Code of Conduct that any water procurement advisor or energy procurement advisor choosing to work also in water can sign up and adhere to.” Www.GrandUnionWater.Com
THE PLANNED CODE OF CONDUCT FOR WATER PROCUREMENT ADVISORS (Dec-16 Iteration) 1.
No cold calls. An introductory letter must precede telephone calls from advisors.
2.
Advisors must have relevant training and qualification in client representation such as FCA, EMA or ISO accreditation or a minimum of three year’s experience of client procurement confirmed by a minimum of three business references.
3.
Advisors must be able to represent they have actually run a tender where suppliers have competed for the opportunity to supply.
4.
Advisors must be able to represent a supplier’s offer in a form that estimates the consumer’s annual budget on an agreed usage
5.
Advisors must be open and transparent on ALL fees, commissions, supplier rebates, margin shares etc. and able to estimate annual total commissions per a scenario agreed with the consumer.
6.
Notwithstanding where NDA applies, Advisors agree to provide - on demand - all communication relating to a tender process such that it can be checked by the client with suppliers
EM Special Report - Water deregulation • february 2017
Special Report
Are you ready for April 2017?
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ith water deregulation just around the corner… is your business ready? Commencing 1st April 2017, non-domestic users in England will for the first time be able to choose their own water supplier. This change will give businesses the opportunity to have their water usage and sewerage billed by a supplier of their choice. The deregulation of the water market will give businesses the ability to: • Consolidate billing from one supplier across multiple sites in different regions • Achieve lower prices due to more competition • Benefit from a wider choice of tariffs • Receive greater customer service • Have a dedicated account manager • AMR Metering, installation and profile data as part of the contract • Online access to water billing data
What’s next for businesses? Businesses with a multi-site portfolio, should be consolidating all their accounts onto one electronic billing invoice with copies of paper invoices. This will reduce the administration of processing multiple invoices. The electronic billing file can then be imported and validated via specialist software or your chosen TPI/broker, to ensure you are only paying for what you use. The validation process will be even more important when the switch from water tariffs to contracts begins in April 2017. Once in place, a fully cost coded accounts payable feeder file can then be supplied to streamline the payment process. STC Energy provides a bureau service to validate utility invoices and also provides access to all water cost and consumption data via our online web portal. Scanned copies of suppliers’ paper invoices are also available via a simple download. This enables our customers to view all their utilities data in one place without having to log into multiple suppliers’ websites.
Carry out a water audit Carrying out a water audit on sites with high water consumption will help to ensure that any issues are detected early on. Typical issues found include: • Wastewater abatements: Non-return of water to the sewer • Oversized water meters – higher standing charges • Leak detection • Incorrect Meter Size Charging By identifying any issues, potential savings and refunds can be obtained. Water audits will also ensure that future charging structures are both accurate and concise for the consumer. In addition, accurate current water costs and consumption will provide long term savings. This will later ensure that all accounts are in order prior to the opening up of the market in April 2017. The water audit process begins with an analysis of all the water invoices and charges that you currently receive from the water authority (water, waste water, surface water, fixed charges and Trade Effluent). At STC Energy, our water audit service goes above and beyond just invoice analysis, it will also follow up with a comprehensive site survey and report. From this you will be able to identify where there is potential for savings and refunds, as well as any priority areas for investigation.
Water AMR Meters & Monitoring Consumption By installing either an AMR meter or data logger onto your water supplies you would be able to monitor consumption in the same way as electricity or gas. Water meters are sometimes installed in inaccessible areas, making it difficult to arrange meter readings without proper health and safety training. Installing a data logger or AMR meter allows easy access to usage data that can be used by the supplier to avoid estimated billing. Our profile alerts service will also help to ensure that water is not wasted. By setting consumption targets, our software can produce exception alerts to inform you of usage outside the usual consumption.
STC’s web portal enables our clients to analyse their consumption. Any deviations found will trigger an email alert to a nominated site contact and/ or it can be viewed on an online map-based site exception dashboard. These alerts can also be directed to and monitored by our dedicated team who will then inform the client of this change. The report will automatically highlight which sites are over target, allowing for fast corrective action. Profile alerts are very successful in identifying energy wastage directly and in suggesting behavioural changes that can be implemented to reduce consumption. Profile alerts work for both small and large multi-sites.
Save money with behavioural/technical changes Many of our case studies for existing clients have revealed that by implementing both behavioural and technical changes, savings can be made. One of the most common causes of high water consumption and billing is taps running unnecessarily. It has been estimated that a running tap wastes over 6 litres of water per minute. Leaks may be difficult to spot without analysing profile data. Our profile alerts can identify if water is being used during periods of closure. The data will then inform you of any potential leaks on your site. It has been estimated that just one leaking tap could waste around 5.5k litres per year. www.stcenergy.com
EM Special Report - Water deregulation • february 2017
Special Report
Is the water industry prepared for the rise of the millennials?
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s the water industry prepares for deregulation, it is taking a look at the skills and talents of its workforce. One thing that is becoming clear is that the water industry, like many other regulated industries, is predominantly populated by people who have been post for quite some time. The Industry Skills Accord reports that 36% of vacancies in the utilities industries are hard to fill; higher than any other sector, and 14% of industry employers report internal skills gaps. Inevitably these challenges will have to be addressed by recruiting and training the millennial generation, born between the years 1980 and 2000. By 2020 they will make up 50% of the workforce. They are more numerous than the Baby Boomer Generation that are now retiring and they will soon outnumber their Generation X predecessors. Attracting the best of this generation will be the key to the success of the Water industry, ignoring them and failing to take account of their needs is the path to slow decline as our existing workforce ages and stagnates. They are different to their predecessors in their expectations, ambitions and attitudes to work, they are the generation that are shaping the future of the business world, their aspirations and easy familiarity with new technologies will come to define the workplace. A defining characteristics of this generation is their easy relationship with the digital world. As digital natives they have grown up with high speed internet and portable devices as commonplace. Their use of social media gives them an expectation of instant results. They are entering the industry with a better understanding of what can be achieved with technology than their more experienced older colleagues. This presents a particular opportunity to an industry, like water, that is going through a sea change – digital natives could give a business a great opportunity in building better customer experience and servicing opportunities. It´s not just technology that makes them different, they have come of age during an economic crisis and their attitudes are coloured by that experience.
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Previous generations were happy to set organisational goals above their personal goals on the basis of being rewarded later, this generation see their own needs as more immediate and important and want immediate reward. They see rapid career progression as the norm, they expect their work to be interesting and varied and they are turned off by rigid management and organisational structures. They expect flexibility, openness and frequent feedback and encouragement. They value knowledge, learning and personal development and if they can´t progress in the organisation they are very willing to move on to another organisation where they can. They are looking for more in life than a long climb up the corporate ladder. They want to feel that they are making an important contribution, their ambition and optimism drives them to define success as being more than financial reward. The water industry needs to examine, and potentially transform, culture and management style if they want to recruit millennial talent. The millennials expect the workplace to be a community with common interests and goals rather than a hierarchy that dictates actions to be blindly followed. It goes without saying that the working environment needs to make the most of digital technology but the millennial won’t be confined to a grey cubicle. They do want to work hard, but they also value a comfortable stimulating environment that blurs the traditional hard lines between work and home life. What should the industry do to make the most of millennial talent?
Technology They are used to being always connected, they respond instantly, they expect portable devices so the technology platforms that we use should recognise and support this.
Flexibility Of course we must have targets and be clear about what we want but we shouldn’t dictate where and how, leave room for creativity. What does it matter if they work from home as long as they complete what
EM Special Report - Water deregulation • february 2017
you ask of them? The workplace needs to be a stimulating and comfortable place to be, we should abandon our traditional distinction between work and home.
Learning and Progression Make online learning and development integral to the workplace using easily accessible structured courses as well as mentoring. We need to encourage progression by developing schemes that recognise achievement and status which will let the best of them advance quickly.
Expect Churn Millennials don’t expect to be in a job for life so we must factor this in to our plans. They will leave but when they do, let´s make sure that they will recommend us to their peers as a forward thinking organisation.
Feedback We need to help this generation achieve their potential by highlighting their contributions and improvements. We need to recognise and encourage innovations and bright ideas, embracing positive change. We must tell them when they do well, review performance often and give lots of feedback. Attracting and recruiting this generation sets our industry a big challenge, we must embrace change, recognise their different needs and make full use of the potential that they offer. If we don´t then we will lose the brightest and best of them to other industries, widening the skills gap and leaving us with an uncertain future. Angela Peart, Utility People www.utilitypeopleuk.com
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Special Report
WATER TIME TO SWITCH Charley Maher, managing director of water2business, explains how businesses across England will soon be able to choose their water and sewerage retailer.
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witching energy suppliers and shopping around for the best deal is a given these days for businesses seeking to drive down costs and become more efficient in the way they operate.
you opt for one that truly understands your business.
And now there’s about to be choice when it comes to water, with businesses of any size being able to choose their water and sewerage retailer. It’s all part of Open Water, which has been introduced by the government and Ofwat. So what does this mean? Well from 1 April 2017 any large or small business, council, hospital, school or even charity can choose their water and sewerage retailer. While the water supplied will still be provided by your local water company and still travel to your premises along the same pipes, most of your interaction will be with your retailer. While a number of water retailers will be offering this service, it’s really important
April 2017
All will be aiming to attract new customers and while price will play a part it is unlikely to be the deciding factor for many businesses switching. That’s because the margins set by the industry regulator Ofwat are slim - an average of 2.5% net margin or 6% gross for retailers. Therefore it’s likely to be the quality of the customer service, investment in innovation, and the value added services offered to your business which will set the retailers apart from each other. At water2business we offer leading customer service and tailored water and wastewater management that will help to improve efficiency and deliver savings. Unlike others, we’re not a newcomer to the market, instead we’re a company with extensive industry knowledge that has a proven track record and already provides business services.
So whether you’re looking for help on reducing water consumption – which in turn could reduce energy costs too – or flexible, consolidated billing for multiple sites, we can help. You can find out more about our other added value services by calling us today on 0345 850 0714 or visiting www.water2business.co.uk
Switch your water and wastewater services to water2business.
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Every day we’re helping businesses like yours save money and improve efficiency. There’s no catch or hidden charges – it’s simply all part of the service provided by water2business.
water and wastewater efficiency advice flexible and consolidated billing for multiple sites award-winning customer service
0345 850 0714 www.water2business.co.uk
Special Report
Making water work: the Scottish experience
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n the eight years since Scotland became the world’s first competitive non-domestic water market, customers of the largest provider, Business Stream, have saved more than £160m. However, the changes go much deeper than that, with competition driving a new complementary market of water-saving products and services, as well an unprecedented focus on customer service. As part of Scottish Water, Business Stream was operating on day one of the Scottish market opening in 2008. That gives it a unique perspective on competition in England, which is due to begin in April 2017. Commercial Director James Cardwell-Moore says the industry has come a long way since those early days: “It’s been an incredible evolution in Scotland for what has generally been a traditional and fairly conventional utility sector. The market used to be all about unit cost but competition has changed that completely. Yes, the bottom line still matters, but our customers are placing a lot more emphasis on service and help to
reduce consumption and be more efficient. . We’re increasingly being approached for bespoke solutions to tackle with business problems or support growth ambitions and our model has evolved to fulfil that demand.” Since 2008, Business Stream’s offering has grown to around 60 services, covering estate-wide usage audits to borehole drilling. It is also trying to educate customers that water management should be taken as seriously as energy efficiency, from sole traders looking to reduce their overheads to heavily-regulated industrial plants producing potentially harmful effluent. As well as actual financial savings including £53 million in water efficiency savings, more than £99 million in discounts and £7 million in energy efficiency savings, Business Stream’s customers in Scotland have reduced water consumption by 24 billion litres. Cardwell-Moore adds: “What we say to businesses is that they need to look at what else their supplier can do for them. Competition has driven down cost in Scotland, and the margins in England for
next year have been set quite low by Ofwat, so there’s not as much scope for discounts. To really benefit from the option to switch, customers need to find a supplier that can help them reduce and manage their water and wastewater more efficiently. Thankfully for us, that’s something we’ve had eight years’ experience of excelling at and we’re fortunate that our track record means we’re now a trusted partner to many of our clients, not just another utility provider.” Having been one of the main advocates for greater competition based on its experience, Business Stream is well placed for next year. It already counts House of Fraser among its UK customers and has recently secured a major foothold in the English market with the purchase of 105,000 non-domestic customers from Southern Water which will make it the third largest provider. Cardwell-Moore concludes: “This is a really exciting time now that we’re counting down to competition in England in April. Our new scale in the market will help us to invest and innovate even further, benefiting our customers north and south of the border.”
One Planet, One Team Improving efficiency across House of Fraser’s 60 stores
THE CHALLENGE House of Fraser’s ‘One Planet, One Team’ strategy had already brought about sustainability benefits across its 60 stores, but the retailer wanted to improve its water efficiency further, reducing costs in the process. Who better to assist than Business Stream who’d already worked successfully with the company in Scotland.
THE SOLUTION We installed automated meter readers (AMRs) into a number of stores across England to record meter readings and flow rates remotely and in real-time. As a result, invoices are based on AMR data, which is more accurate than conventional meter reading, allowing the company to benchmark the performance of stores. The AMRs also helped to identify inefficiencies and monitor the progress of any remedial or efficiency measures introduced.
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We made it simpler for House of Fraser by introducing consolidated billing for the 11 stores supplied water by us. This meant they received with a single, itemised statement. A bill validation exercise was carried out to ensure the accuracy of historic water billing for all of the organisation’s sites across England, identifying any charges billed in error by previous suppliers for cost recovery. An overall water management strategy was also developed to help improve control and reduce water consumption, including sub-metering and the introduction of water saving devices.
THE SUCCESSFUL OUTCOME •
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House of Fraser now has a better understanding of its water usage, which in turn has enabled the company to reduce environmental impact and cut costs The accurate readings provided by
EM Special Report - Water deregulation • february 2017
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House of Fraser’s AMRs mean the number of estimated bills is reduced, providing greater certainty about usage levels and costs The consolidated billing covering the 11 stores supplied by Business Stream has reduced management time in reviewing and processing invoices We are supporting them with their long term aim to completely remove estimated readings from the billing process The ability to detect leaks has further helped House of Fraser to minimise the time and costs involved in identifying and fixing problems Speak to our team of experts by visiting business-stream. co.uk