Environment, Food and Rural Affairs CommitteeWritten evidence submitted by the Major Energy Users’ Council (MEUC)
Executive Summary
The Government’s Water White Paper is an essential step in developing a customer-focused water industry.
There is a real appetite among our customers (who represent about 25% of business consumption) to be able to choose their supplier and we therefore welcome the Government’s intention to establish a UK market for retail water and sewerage services and to reduce the threshold to zero, which will enable all non-household customers to benefit.
We know that since retail water competition was introduced in Scotland in 2008, customers have benefited from reduced bills, improved customer service levels and greater water efficiency.
It is important that the Government meets its commitment to publish a draft Water Bill in early 2012 and that it is ideally included in this year’s Queen’s Speech. This will enable customers to receive the benefits that competition will deliver as soon as possible.
Our recent research reveals that our members (ranging from Asda, Cable & Wireless, Celanese, Iceland, Mitchells & Butlers, MOD and Rolls Royce) are seriously concerned about poor levels of customer service from their existing suppliers and have highlighted their problems in connection with billing inaccuracies, tariff options, lack of advice on water efficiency, difficult access to meters, service interruptions, leakage, sewage works odour, water resources and risk of flooding and drought. It is clear that there is urgent demand for retail competition.
Background
This evidence is submitted by the Major Energy Users’ Council (hereafter MEUC), which is now celebrating its 25th anniversary. We are the UK’s leading lobby and networking organisation for the UK’s largest business consumers of electricity, gas and water.
The Benefits of Competition
Currently, some customers are receiving thousands of separate paper water bills per year, which is inefficient. A competitive market would help to reduce the number of suppliers an organisation would work with as well as incentivise companies to improve the service they provide, such as switching to online billing.
By abolishing the threshold altogether, a million additional customers will be able to benefit from competition, instead of only 25,000 more when the threshold is at five megalitres. Many of our largest members have sites which consume less than 5ML of water; some use less than 1ML. However, the aggregated consumption of these sites is significant and these customers want to deal with one retailer across the UK. It is important that the delivery of the market takes account of this requirement.
Ensuring the Successful Impementation of Retail Water Competition
A draft Water Bill, which clearly sets out how to ensure an orderly transition to a competitive market, should be introduced as soon as possible. It would therefore be a missed opportunity if the Water Bill is not included in this year’s Queen’s Speech.
It is vital that the market is simple and easy to understand for customers with common standards and procedures to minimise any confusion for those customers operating across the borders of Scotland and England.
We know from the lessons learned in Scotland that the success of the market is dependent on certain steps being taken, including a level playing field for new entrants, the removal of the cost principle and regulated wholesale prices and the implementation of customer protection, including default tariffs and codes of practice.
Promoting Water Efficiency
MEUC has held many meetings over the years to encourage best practice in water efficiency by arranging for presentations from members and water consultants on methods used to reduce consumption and costs. As a result many of the UK’s leading businesses have been spurred on to improve their efficiency. Regrettably, water is seen as a minor issue in many large businesses and minimum time is spent on it. Suppliers must become much more active in offering advice and support. In Scotland, Business Stream has recognised that customers are not able to spend much time on water issues and in many instances has assumed responsibility for reducing costs.
Addendum
Typical responses from two of our members, AstraZeneca and a large retail group illustrate the depth of feeling about existing service levels and the urgent need for competition.
AstraZeneca’s view:
Metering and AMR reliability and availability including protocols for installation of data loggers on fiscal meters.
Complexity of tariffs and onus on the customer to ensure they are getting the best price and being charged correctly.
Water scarcity and sustainability.
What will Competition mean if SWD/sewerage is not included?
Quality and availability of electronic billing.
Rising water costs.
The basic supply chain costs precise and transparent.
Large retailer’s view:
We have experience of being supplied by every single licensed supplier.
The level of customer services varies dramatically from those who are reasonably proactive and forward thinking to those who appear to treat customers as the inconvenient end of the chain where they happen to get their money from.
“Day to day” service—the basic meter reading and billing varies. Some are good (AMR data used, group bills available electronically, billed monthly), most are poor—estimated bills, wrong tariffs applied, individual paper bills for every site, sporadic billing cycle (month? quarter? half year? annual? sometimes never..).
One-off problems are sometimes dealt with in an unreasonably heavy-handed way (eg after we’ve taken over a site we may not have properly notified the water company of change of tenancy, so bills can go unpaid for a while—however, even after we’ve made contact and given assurances, some companies will still threaten to disconnect the site unless they get immediate payment, or request unreasonable deposits—all this in spite of the fact that they will nearly always be supplying—and being paid for—other sites that we own. They should trust us to fulfil our promises.
The big attraction for us of opening competition in the water market is to be able to select a single supplier (or perhaps a couple) who could offer services at the higher quality end of the scale—AMR-based reads, regular consolidated bills etc, plus the ability to help us manage the supply change hiccups. I don’t anticipate huge financial benefit, although I would expect there to be some efficiencies and economies of scale in some regions—eg the average cost to serve per site for one supplier across all our sites has to be less than a company only supplying a handful.
23 January 2012