How the forthcoming deregulation of England’s water is expected to affect farmers

As of April 1, this year, England’s water market will be deregulated, meaning that business water consumers and other non-household water users will be able to choose who supplies their water. Scotland is the only other nation which has a deregulated water market. Having begun the deregulation process in 2008, followed by a trial period, Scotland now has a completely deregulated water market.

Farming accounts for approximately 70% of water used in the world today. Being so heavily reliant on water, farming is an industry likely to be significantly affected by the deregulation of water. LSI Energy, specialists in water bill analysis, takes a look at how farmers are expected to be affected by the forthcoming deregulation of England’s water market.

Savings for farmers and other businesses

It has been estimated that businesses could make significant savings on their water bills, providing they plan in advance for the water industry changes.

The deregulation will see England, like Scotland, moving away from the current system, in which commercial consumers receive their water and waste services from a single supplier in their area, to being able to choose the best water supplier for their needs. Being able to ‘shop around’ and take advantage of a more competitive market, farmers could potentially save thousands of pounds on their water bills.

However, in order to exploit the potential gains of a deregulated market, farmers and other water-reliant businesses, should begin preparing for the industry changes. For example, they could carry out water audits on their water consumption so they are able to make an informed decision about which deal would be best for them when they become available in April.

The deregulation of the industry in Scotland has led to businesses cutting millions of pounds from utility bills. According to Business Stream, an arm of Scottish Water, within six years of Scotland’s water sector being deregulated, Business Stream was able to cut around £100 million from its customers’ bills.

It is predicted that even bigger savings will be enjoyed by businesses in England through the deregulation initiative. Open Water, a UK government organisation set up to deliver a competitive water market, predicts that the deregulation of water will deliver approximately £200 million of benefits to business customers in England and the UK economy.

Despite a relatively slow start, take up of the Scottish water deregulation has been positive. Discounts across providers started off small but have now grown to around 20 – 25%. In England, it is estimated that such discounts will start out at a modest 5% but will grow and are likely to be in the region of around 12 – 15% , across the two countries.

Competition raising the bar

Being a more competitive market, it is also estimated that customer service provided by water providers will improve in England, as providers will generally raise the bar as they focus more greatly on the needs of their customers.

Teething-troubles, such as new online portals taking time to get right, are likely to be in the pipeline for England’s deregulated market, but the increased competition is expected to translate into higher quality customer service and care.

By understanding the benefits of a deregulated market, through the lessons learned from Scotland’s experience, farmers and other businesses in England are likely to take advantage of the competitive environment and cost-saving nature of water deregulation. This is likely to result in a quicker update in businesses utilising the benefits of water deregulation than they did in Scotland, where uptake was slow.

As the Department for Environment, Food and Rural Affairs’ ‘Water Usage on Farms: Results from the Farm Business Survey, England 2014/15’ shows, when it comes to water sources , mains supply is the most common source of water on farms, particularly on farms located in the East of England and those outside Less Favoured Areas.

Through the deregulation of the water industry in England, farmers, which are heavily reliant on water from mains supplies, are likely to reap cost-saving and customer service benefits, providing they act proactively, and start planning for the changes sooner rather than later.

LSI Energy are specialists in analysing water bills for commercial customers in the UK. LSI Energy can help farmers and other businesses be proactive about their utility consumption and consequently make significant savings.  

Contact The Farmer Network office if you would like LSI Energy to review your water bills.

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