Next April, England will follow Scotland’s lead and give non-domestic water users more choice over which company bills them. Will your business make savings or is that a pipe dream? We ask industry experts from Utilitywise to explain water deregulation.
What is happening in April 2017?
It’s when the water industry in England begins to deregulate and the barriers to competition start to come down.
If you are a business, charity or public sector organisation, it means you will be able to switch the retail part of your water services to your choice of service provider.
Every customer from 1 April will be free agents – you will not have a contract, so you can switch straightaway.
What is Ofwat’s role?
Ofwat is the industry regulator. It is the teeth of a £3 billion industry. To establish the market, Ofwat asked the 14 regional water companies in England to split their businesses between wholesale (the infrastructure) and retail (customer service and billing).
Between now and April, Oftwat has told the water companies they have to declare their intentions.
How have the water companies reacted?
Most of them reacted to deregulation by inflating the wholesale price. But Ofwat has warned them that in 2020, when it rebalances the market, they will have to bring the wholesale price down.
Some (e.g. Thames Water, Southern, and Portsmouth) have already decided not to have a retail division and have informed customers.
United, Severn Trent and Anglian are among those that have decided to create retail arms either to keep hold of their customers or to poach from those that aren’t going retail. Others companies are undecided.
Scotland deregulated its water industry in 2008. What were customers’ attitudes to switching.
At the start, many customers in Scotland were critical of the service they were receiving from the incumbent company, Scottish Water. The government decided to break its monopoly to force improvements.
Customers felt that any alternative was a bonus and were prepared to switch regardless of price. Many did just that.
We think this will also be the case in England. We predict customers will be delighted to have a chance at switching as there’s a groundswell of opinion that the service isn’t as great as the water companies think it is.
What benefits has Scotland seen?
Customers receive a better service, lower prices because the water market is deregulated, and multiple branches or sites can be brought under one bill, which is a big advantage.
They have also benefited from lower CO2 emissions, water efficiencies, and better monitoring and understanding of how they use water.
What will be the benefits of switching in England?
Very much the same. A decrease in price will be minimal at first, as it was in Scotland, but when the market rebalances, that will improve.
In Scotland there was a high margin between the wholesale and retail price at the beginning, so new providers could apply for a licence and enter the market. That won’t happen in England because the margin at the moment is too small. So there won’t be an explosion of new providers.
However, there will be some new names for customers to get to know, as the water companies in England move away from being geographically specific and change the name of their retail divisions. Northumberland Water, for example, will retain its name for its wholesale arm but its retail division is called Wave.
In the meantime, customers will ask ‘then what can you do for me?’ The answer is better service and reduced usage and consumption, particularly if you are offered a multi-utility package i.e. your gas, water, electricity and even telecoms packaged together.
What happens in October this year?
Although the market deregulates in April 2017, prices will be available in October 2016 so you don’t have to wait until next year to do something about it.
Every water company will have to publish their prices to know the margin and split of wholesale and retail. It means you can commit to a company that has the best price.
So is it best to act now or wait?
Act now. We can’t speak for other firms, but you can talk to Utilitywise, provide all your information and get everything in place, then relax knowing that when the switch occurs you will have already chosen and switched over.
The power is in your hands to put your water account where you want. If everyone does nothing, there’s no reason for suppliers to reduce prices.
Why is 2020 significant?
It’s the year when Ofwat instructs the wholesale companies to reduce their price. It means lower bills for customers.
Do you foresee any problems?
People will be confused with name changes as water companies they have known for years use different names for their retail arms.
Another question is whether the billing will be right. In Scotland, many retail providers still don’t know where all their customers are. There are gaps everywhere.
Some water companies will be bad at sending bills, others will be better. We can’t know yet.
What does the future hold?
Margins will be small at the start so we expect prices to sizzle. The real gains will be in better management of water.
Ten years down the line, the future will be multi-utility bills where your water, electricity, gas and even telecoms are packaged in one bill. This is where true savings will lie and it’s a course that Cathryn Ross, CEO of Ofwat, has already recommended in a Daily Telegraph interview.
Utilitywise will be procuring competitive water prices for people while advising on how to reduce consumption and water usage. As far as we know, we’re the only company offering multi-service bundles.
Responsible Energy Investments Could Solve Retirement Funding Crisis
Retiring baby-boomers are facing a retirement cliff, at the same time as mother nature unleashes her fury with devastating storms tied to the impact of global warming. There could be a unique solution to the challenges associated with climate change – investments in clean energy from retirement funds.
Financial savings play a very important role in everyone’s life and one must start planning for it as soon as possible. It’s shocking how quickly seniors can burn through their nest egg – leaving many wondering, “How long your retirement savings will last?”
Let’s take a closer look at how seniors can take baby steps on the path to retiring with dignity, while helping to clean up our environment.
Tip #1: Focus & Determination
Like in other work, it is very important to focus and be determined. If retirement is around the corner, then make sure to start putting some money away for retirement. No one can ever achieve anything without dedication and focus – whether it’s saving the planet, or saving for retirement.
Tip #2: Minimize Spending
One of the most important things that you need to do is to minimize your expenditures. Reducing consumption is good for the planet too!
Tip #3: Visualize Your Goal
You can achieve more if you have a clearly defined goal in life. This about how your money can be used to better the planet – imagine cleaner air, water and a healthier environment to leave to your grandchildren.
Investing in Clean Energy
One of the hottest and most popular industries for investment today is the energy market – the trading of energy commodities. Clean energy commodities are traded alongside dirty energy supplies. You might be surprised to learn that clean energy is becoming much more competitive.
With green biz becoming more popular, it is quickly becoming a powerful tool for diversified retirement investing.
The Future of Green Biz
As far as the future is concerned, energy businesses are going to continue getting bigger and better. There are many leading energy companies in the market that already have very high stock prices, yet people are continuing to investing in them.
Green initiatives are impacting every industry. Go Green campaigns are a PR staple of every modern brand. For the energy-sector in the US, solar energy investments are considered to be the most accessible form of clean energy investment. Though investing in any energy business comes with some risks, the demand for energy isn’t going anywhere.
In conclusion, if you want to start saving for your retirement, then clean energy stocks and commodity trading are some of the best options for wallets and the planet. Investing in clean energy products, like solar power, is a more long-term investment. It’s quite stable and comes with a significant profit margin. And it’s amazing for the planet!
What Should We Make of The Clean Growth Strategy?
It was hardly surprising the Clean Growth Strategy (CGS) was much anticipated by industry and environmentalists. After all, its publication was pushed back a couple of times. But with the document now in the public domain, and the Government having run a consultation on its content, what ultimately should we make of what’s perhaps one of the most important publications to come out of the Department for Business, Energy and the Industrial Strategy (BEIS) in the past 12 months?
The starting point, inevitably, is to decide what the document is and isn’t. It is, certainly, a lengthy and considered direction-setter – not just for the Government, but for business and industry, and indeed for consumers. While much of the content was favourably received in terms of highlighting ways to ensure clean growth, critics – not unjustifiably – suggested it was long on pages but short on detailed and finite policy commitments, accompanied by clear timeframes for action.
A Strategy, Instead of a Plan
But should we really be surprised? The answer, in all honesty, is probably not really. BEIS ministers had made no secret of the fact they would be publishing a ‘strategy’ as opposed to a ‘plan,’ and that gave every indication the CGS would set a direction of travel and be largely aspirational. The Government had consulted on its content, and will likely respond to the consultation during the course of 2018. And that’s when we might see more defined policy commitments and timeframes from action.
The second criticism one might level at the CGS is that indicated the use of ‘flexibilities’ to achieve targets set in the carbon budgets – essentially using past results to offset more recent failings to keep pace with emissions targets. Claire Perry has since appeared in front of the BEIS Select Committee and insisted she would be personally disappointed if the UK used flexibilities to fill the shortfall in meeting the fourth and fifth carbon budgets, but this is difficult ground for the Government. The Committee on Climate Change was critical of the proposed use of efficiencies, which would somewhat undermine ministers’ good intentions and commitment to clean growth – particularly set against November’s Budget, in which the Chancellor maintained the current carbon price floor (potentially giving a reprieve to coal) and introduced tax changes favourable to North Sea oil producers.
A 12 Month Green Energy Initiative with Real Teeth
But, there is much to appreciate and commend about the CGS. It fits into a 12-month narrative for BEIS ministers, in which they have clearly shown a commitment to clean growth, improving energy efficiency and cutting carbon emissions. Those 12 months have seen the launch of the Industrial Strategy – firstly in Green Paper form, which led to the launch of the Faraday Challenge, and then a White Paper in which clean growth was considered a ‘grand challenge’ for government. Throughout these publications – and indeed again with the CGS – the Government has shown itself to be an advocate of smart systems and demand response, including the development of battery technology.
Electrical Storage Development at Center of Broader Green Energy Push
While the Faraday Challenge is primarily focused on the development of batteries to support the proliferation of electric vehicles (which will support cuts to carbon emissions), it will also drive down technology costs, supporting the deployment of small and utility-scale storage that will fully harness the capability of renewables. Solar and wind made record contributions to UK electricity generation in 2017, and the development of storage capacity will help both reduce consumer costs and support decarbonisation.
The other thing the CGS showed us it that the Government is happy to be a disrupter in the energy market. The headline from the publication was the plans for legislation to empower Ofgem to cap the costs of Standard Variable Tariffs. This had been an aspiration of ministers for months, and there’s little doubt that driving down costs for consumers will be a trend within BEIS policy throughout 2018.
But the Government also seems happy to support disruption in the renewables market, as evidenced by the commitment (in the CGS) to more than half a billion pounds of investment in Pot 2 of Contracts for Difference (CfDs) – where the focus will be on emerging rather than established technologies.
This inevitably prompted ire from some within the industry, particularly proponents of solar, which is making an increasing contribution to the UK’s energy mix. But, again, we shouldn’t really be surprised. Since the subsidy cuts of 2015, ministers have given no indication or cause to think there will be public money afforded to solar development. Including solar within the CfD auction would have been a seismic shift in policy. And while ministers’ insistence in subsidy-free solar as the way forward has been shown to be based on a single project, we should expect that as costs continue to be driven down and solar makes record contributions to electricity generation, investment will follow – and there will ultimately be more subsidy-free solar farms, albeit perhaps not in 2018.
Meanwhile, by promoting emerging technologies like remote island wind, the Government appears to be favouring diversification and that it has a range of resources available to meet consumer demand. Perhaps more prescient than the decision to exclude established renewables from the CfD auction is the subsequent confirmation in the budget that Pot 2 of CfDs will be the last commitment of public money to renewable energy before 2025.
In short, we should view the CGS as a step in the right direction, albeit one the Government should be elaborating on in its consultation response. Its publication, coupled with the advancement this year of the Industrial Strategy indicates ministers are committed to the clean growth agenda. The question is now how the aspirations set out in the CGS – including the development of demand response capacity for the grid, and improving the energy efficiency of commercial and residential premises – will be realised.
It’s a step in the right direction. But, inevitably, there’s much more work to do.
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