The future of business water: Defra’s Water for Life White Paper

The water industry in the UK was privatised 20 years ago, but when you compare it to the energy industry - which was only privatised just over a decade ago - the difference is clear to see.

Image by WhatMeWorry101 via Flickr.

Businesses can - and do - switch their energy supplier, but when it comes to water, it’s almost unheard of. 

Given how central a reliable, affordable water supply is to our economy (it’s essential for industry, agriculture, energy production and more) it’s surprising that it’s often taken for granted, particularly given that climate change could mean water scarcity becomes an even bigger issue in the future. 

It was against this backdrop that Defra released its Water for Life White Paper last month. It presents a vision for the future of the water sector, including some interesting proposals for businesses, which fall in two main areas: water abstraction and competition.

Water abstraction

Businesses that take water from rivers, lakes, streams etc (more than more than 20 cubic metres a day) need an abstraction license. But Defra acknowledges that currently it can be difficult for businesses that want to start water abstratcion or increase their water abstraction to get a year-round reliable license.

The White Paper proposes that a better market in abstraction licenses would make it easier for businesses to access water in the volume and the location they need.

Competition

At the moment, only business customers in England that use 50m litres or more of water a year can switch their water or sewerage supplier under the ‘inset’, ‘water supply licensing’ or’ ‘new appointments and variations’ regimes - but it doesn’t happen often. In fact, only one business has switched supplier under the water supply licensing regime.

In Scotland, there’s an alternative regulatory regime, which is much more like the energy market. It has seen over 40% of businesses renegotiate the terms of their contract with their water supplier to get better prices and/or service, including discounts for paying by Direct Debit, aggregated purchasing, more information on water usage, and innovative schemes like rainwater harvesting. There have been estimated savings of £20m in three years, and apparently it makes businesses more water-efficient too. The report cited an example of one business with multiple sites which saved an impressive £80,000 a year just by aggregating the 4000 paper bills it used to receive into one e-bill.

To help get businesses switching, Defra has introduced new legislation which will lower the switching threshold to 5m litres - which will mean that the number of businesses which are eligible to switch water supplier will increase from 2,200 to 26,000. The White Paper says that further deregulation is on the way.  

There are also proposals for ways to get new players to enter the market, so that business customers have a greater selection of water companies to choose from.

What do you think of these proposals? Would you ever consider switching your business’s water supplier? Let me know your thoughts and experiences in the comments.