Wake up to water: higher profits could be on tap

The countdown to the open water market begins: are you ready?

When it comes to utilities, water is often the poor relation to gas and electricity.  The comparatively low cost of water supply and waste water management, coupled with an inflexible marketplace, has led to it being a little understood, little noticed line on many organisations’ P&L.  Twelve months from now, that is all set to change.

The Water Bill, passed in May 2014 will revolutionise the water landscape in England forever.  It gives commercial and other non-household water users the opportunity, for the first time to switch suppliers, negotiate their supply contracts (in terms of price and service level) and is hoped to result in improved customer service levels.  For large, multi-site organisations, the move could also reduce administration due to a cohesive, consolidated approach to billing.

What’s driving this move? Ofwat cites climate change leading to more droughts and floods, increasing environmental standards and a fast growing population as key drivers for this initiative. The focus is all on water efficiency and this is sorely needed as significant risks to water availability have been reported. According to the Water Resources Group, global demand for fresh water will exceed supply by 40% by 2030.

Making less water go further will not only help to make the supply chain more resilient to future demands, but it should also help to reduce bills.  For these profit-boosting impacts to be felt however, it’s important to get ahead, as Claire Yeates, Director of independent water management specialists, Waterscan, explains:  “The open water market comes into force in April 2017 and that seems a long way off, but negotiations with water suppliers is scheduled to commence in October 2016 – under 12 months from now.  In order for UK businesses to get the best deal, we cannot stress enough how important it is to be prepared - and that preparation needs to start now.”

She continues: “We are encouraging companies to collate 12 months’ good quality water data and to get under the skin of their water consumption.  Knowing the detail behind your bills - how much water you use, where and when - will empower purchasing managers to enter negotiations with confidence and structure their water contracts in the most profitable and environmentally sustainable way.  These are the companies that will see the greatest benefits from the market reform.”

The problem is that much of this information is buried in what could be as many as 27 different water contracts if you’re a multi-site operation, and all water companies have different charging mechanisms making accurate price comparisons difficult at best.  It’s a daunting task but a critical one, so where’s the best place to start?

Waterscan offers a variety of consultancy services including a free and detailed Water Check service which helps clients fully understand their current operational water footprint and importantly, to put it into context by benchmarking against  industry norms.  With minimal input required from clients, this exercise helps Waterscan to take swift action to address any inefficiencies and correct billing errors, which often results in tens of thousands of pounds saved.

Mrs Yeates stressed the importance of ironing out these inefficiencies prior to the market opening. She said: “Our advice is that it’s imperative to undertake a thorough operational water footprint and billing analysis prior to negotiating a new water contract, because once you switch supplier, it’s extremely unlikely that refunds for historically incorrect charges will be made easily.  Even simply understanding your water usage could save up to 55% of annual spend, and that’s a quick win for the bottom line.”

Click here for Waterscan’s ’Ten point guide to the English open water market’.  Or, to find out more about Waterscan’s Water Check service, contact www.waterscan.com or call 01243 839 880.

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