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Lifting the Fog: How Covid Illuminated the Way for the Water Market

By Barry Millar, Operations Director

At the most recent Self-Supply Users Forum in September, I was asked to present my reflections on the non-household water market to date. For me, there have been three clearly defined phases in its development so far.

The first phase I shall term ‘market infancy’: this covers pretty much the whole time between market opening in April 2017 to when the Covid pandemic began to bite here in the UK. During this time, awareness levels of the ability to switch suppliers were reasonably high at around 50% and customers were beginning to exercise their rights to do so. However, I’m sure that many across the industry would agree with me that generally, progress towards an efficient, sustainable marketplace was slow. This was for two key reasons.

Trading party performance in terms of billing accuracy, customer service and poor credit support for market entrants left much to be desired and this was largely due to a lack of clarity on the roles and responsibilities of wholesalers and retailers. When it comes to meter ownership and billing, it’s crystal clear who does what, but when you get beyond the day-to-day to work on bigger things like water efficiency and end-user liaison, the obligations become foggy. Effectively, opposing forces were created in a market that needed to come together. Many expected that previous operational models that had worked for decades would continue to work in the new market landscape, but this simply wasn’t – and couldn’t – be the case.

The second, and biggest, reason for sluggish market performance across the board was very clear to me from day one: high quality data on which decisions could be taken. Or the lack of it.

Things were set to change though as the market moved into phase two; what I call ‘pandemic operations’. Quite unexpectedly, this is where things began to get interesting. As has often been said, necessity is the mother of invention, and this period which required urgent, essential action, is when we began to see steady, positive progression on various fronts in the water market.

Collaborative working began to take root as wholesalers and retailers needed to work together in an unprecedented way. One example is how speedily occupancy data to identify vacant premises was gathered and processed into the market operating system. Another is helping the hospitality sector to dispose of tonnes of beer waste in a responsible manner. Solutions were identified and guidance was provided extremely swiftly as a result of the industry working together.

At the same time, the pandemic shone a light on the issues around data, particularly the problem of long-unread meters. These issues were now getting the attention they deserved and there was a will to resolve them. The customer credit situation also took a step in the right direction, despite a few isolated remaining matters, to an almost unrecognisable position compared to pre-pandemic.

Finally, we move on to a ‘market recovery’ phase which brings us up to date. Retailer performance remains patchy, but collaboration is at an all-time high, with Self-Suppliers in particular at the forefront. Data in the market has undergone a real evolution too, in part due to significant momentum on the rollout of smart metering and through the implementation of trading party incentive schemes which have proved pivotal.

A concerted effort is now required to ensure the longevity of these gains made over the last 18 months. As we look ahead, data and collaboration are the two key areas that I believe we need to keep focused on. Quality, timely data is the lynchpin of the market; the moment we take our eyes off of it, everything else will fall over in quick succession. And for that to happen, enhanced engagement and cooperation between wholesale, retail and end users is needed. This will ensure that our fledgling market works for all parties and the pace of achieving water efficiency as part of our national water efficiency drive will quicken.

I await with interest the more formal findings that Ofwat will reveal in its State of the Market Report, due for publication very shortly.