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Half-Full or Half-Empty?

Water Market Awareness Level at 53%

Water awareness represented by a glass of water and percentages.Approximately half (53%) of the 1.2 million businesses, charities and public sector customers in England that are eligible to choose their water and wastewater retailer are aware that they can do so, according to Ofwat’s second annual state of the market report.

If you’re an optimist, you’d probably think that’s pretty good going; especially considering that awareness levels are on the up (it was 48% after the first year).

The flipside, of course, is that there are 47% – or 564,000 – non-residential water customers that are completely unaware that they could benefit from participating in the nation’s newest competitive utility market. And that’s a real shame because it means they’ve been missing out on its benefits for over two years now.

Delve further into the independent research behind Ofwat’s report and there’s a great deal of inconsistency in terms of market awareness. Large organisations are more likely to know about it (61%) than micro businesses (51%). If your work is in the agricultural, forestry, fishery, wholesale or property service sectors, or you’re located in the Wessex or Yorkshire Water regions, you’re ‘significantly less likely to be aware of the changes to the water retail market’ than others. It’s a patchy picture, not one that is closely aligned with the vision of an open market that is devoid of boundaries.

This lack of awareness has a direct impact on participation. Just 13% of eligible customers in England have been active in the market (switching or renegotiating with their incumbent supplier) since it opened in April 2017. Those that have, have achieved financial savings of around £10 million during the last reporting year.

We can analyse the statistics and take a view on whether the glass is half-full or half-empty until the cows come home, but it doesn’t change the fact that there’s a long way to go before we can say that we have a nation of businesses that are fully engaged in water. And, until this is achieved, how will we achieve a nation of fully engaged employees and members of the public?

This universal engagement is important because all the indicators are that we’re only a couple of decades away from running out of usable water. There are many reasons why – climate change, population growth, changes in land use to name a few – but action is needed, and soon.

As with so many things, it will be down to businesses and large public sector organisations to lead the way and champion the water cause, simply because they have the biggest impacts and influence.

So, why aren’t they?

Although water is a critical component of any business operation, for many, it remains an insignificant cost when compared to other overheads so there’s little fiscal pressure bearing down on financial directors to question the status quo and take action.

Similarly, there are currently insufficient disruptions to supply to get operations directors up in arms. Sustainability directors are now usually stretched somewhere between carbon footprint and waste management to add water sustainability to their priority list of issues to tackle.

Raising awareness of the opportunities that the open market brings, as well as the risks of non-participation, to these key influencers is therefore increasingly urgent.

Ofwat is aware of this and began the process six months prior to the market opening with a national survey to gauge levels of awareness and understanding of this significant change to water procurement. At the time, the regulator stated: “One of the factors for a successful market is customer awareness and understanding and for Ofwat to be assured that exists, we felt it was important to firstly measure it and then look to what may be required to improve it.”

While acknowledging the importance of effective, proactive communications to encourage participation and switching behaviour, what Ofwat and market operator MOSL may not have foreseen was a long list of market teething problems that they have also had to deal with. Since opening, the market has been dogged by incomplete data to facilitate decision-making, incompatible systems to empower collaboration and a seemingly overwhelmed wholesaler-retailer network that’s finding it hard to embrace change. Whilst a degree of progress is being made on all these fronts, significant challenges remain and, with so many competing priorities, it’s difficult to see how Ofwat and MOSL can be freed-up to create a comprehensive, coordinated marketing drive any time soon. In fact, such a drive could even be detrimental in the medium to long term if customers enter the market and are disappointed by the experience: ensuing complaint levels could well deter others.

But let’s not be pessimistic here. There are several initiatives that are helping to spread the word and enhance the benefits of market participation. The bi-annual Retail Users Forum coordinated on behalf of business water customers is one example. With the sole aim of supporting the success of the water market, this forum is a platform for customers to engage directly with key industry bodies to raise awareness of the wider issues, share positive feedback and discuss current challenges surrounding market participation.

Regardless of whether you think the glass is currently half-full or half-empty, everyone can all get involved in boosting the sustainability of supplies and the resilience of businesses by reducing water costs and consumption. If you’re not active in the market, make it your mission to find out more and get involved in 2020.