Water competition comes to Scotland
01 April 2008
As of April 1, more than 100,000 businesses and public bodies, such as local authorities, hospitals, schools etc. in Scotland can choose from whom they buy their water and sewerage services, in a radical move that is being hailed as a world first for the water sector.
The regulator, the Water Industry Commission for Scotland (WICS), has been working to put the new competitive structure in place since the Water Services (Scotland) Act of 2005 paved the way for the break-up of the monopoly system run by Scottish Water.
Four suppliers have now been licensed to provide services to Scottish businesses – Satec, Aquavitae, Business Stream and Osprey Water Services - with one more application, from Ondeo Industrial Solutions, currently under consideration.
Alan Sutherland, Chief Executive of WICS, hailed the introduction of choice in the sector as heralding a new era of improved services and competitive pricing. “Scotland is leading the world in the introduction of a competitive framework for the water and sewerage sector. It is a system that has never been tried anywhere else in the world. Any company, of any size, from the smallest corner shop to an international conglomerate, stands to benefit from these changes.
We anticipate that choice will result in cost savings and service improvements as new licensees enter the market, as that is the only way they will encourage customers to switch suppliers.”
From April 1, all business customers and public bodies are eligible to switch water companies by making a phone call to their new chosen supplier. The rest of the process will be handled by the new supplier together with a new independent industry body, the Central Market Agency (CMA).
Apart from a competitive pricing policy, new licensees can offer a range of additional services including single source billing, water saving measures, leakage reduction, quality and consistency of supply, and fast reaction response. Environmental advice such as the use of grey water or off-peak pumping services, and individually tailored solutions that are geared to each user’s needs, can also be accommodated.
All the new water supply companies are also obliged to offer customers a basic default level of service, for a default tariff determined by WICS. The default tariff is no more than the maximum charge customers would have paid to Scottish Water if competition had not been introduced. The increase in the default tariff will be, on average, less than the rate of retail price inflation until 2010.
Several companies have already made the decision to switch, paving the way for more companies to switch supplier in the coming weeks.
Mr Sutherland said: “Choice is good for Scottish businesses and public bodies. Scottish Water’s retail arm, Business Stream, has already saved up to £10m in the run-up to April 1 to pass on to clients as they prepare for the competitive marketplace and we anticipate more in the future.
The market will continue to be regulated. If any supplier is in breach of their licence conditions then we have the right to revoke their permit to trade. What we have put in place is a competitive environment that will safeguard the environment and provide additional services at the point of need.” Website Details: www.scotlandontap.gov.uk
or www.watercommission.co.ukNotes to Editors:
1) Copies of the licences granted to Aquavitae, Satec, Osprey Water Services and Business Stream can be found on the Commission’s website, www.watercommission.co.uk
. The Commission’s website will also contain details of the application by Ondeo Industrial Solutions and future licence applications.
2) Formerly known as Scottish Water Business Stream, Business Stream became a stand alone company within the Scottish Water group in November 2006 in preparation for market opening on 1 April 2008.
3) All business customers and public bodies, such as, local authorities, hospitals, schools etc are eligible to switch water companies.
4) For information about how to apply for permanent water services and/or sewerage services licences, including details of the application process, go to www.watercommission.co.uk or telephone 01786 430200.
5) From 1 April 2008, Scottish Water remains the wholesale supplier of water and sewerage services in Scotland. Licensed service providers will buy wholesale services from Scottish Water and retail these services to business customers. Competition of this kind (similar to that introduced to the electricity and gas industries) should bring wider choice, lower prices, better services and increased innovation.
6) End customer charges continue to be protected. Licensed service providers in the market are required to offer default tariffs set by WICS to all customers. These default tariffs will rise by no more than inflation until 2010 (the tariffs business customers would have paid had Scottish Water remained their end service provider).
7) The framework for competition in the Scottish water industry is set out in the Water Services etc. (Scotland) Act 2005. The 2005 Act requires the Water Industry Commission to establish a regime to license new entrants into the market, and facilitate the orderly opening of the market. It also required Scottish Water to establish a separate retail entity (now Business Stream) to serve non-household customers in Scotland. For more press information or to arrange an interview with WICS’ chairman Sir Ian Byatt call Tony Brown, Arthur Brown or Julie Fourcade at 3 Monkeys Communications on 020 7440 2410 or e-mail [email protected] / [email protected] / [email protected] or call Katherine Russell, WICS’ Director of Corporate Affairs, on 01786 430200.