The Water Open Market: Think Before You Dive In

From April 2017, commercial and other non-residential water users in England have the opportunity to choose where to buy water and wastewater services from. This freedom of choice is most welcome but, with choice, comes complexity. With multiple service providers and procurement routes available, careful consideration of the options is a prerequisite for making the most of the open market opportunity and optimising service levels and best value for your organisation.

Claire Yeates, Director at Waterscan commented: “We understand that, because businesses in England have not had to concern themselves with water supply before, diving into a whole new area can be daunting. All organisations will have their own approach. Many will wish to buy and manage their own water and waste water supply internally having robust procurement processes and procedures in place. Some will take a proactive approach and leap head-first into the pioneering concept of self-supply or seek support by outsourcing water procurement. Many more however will take the potentially costly route of taking no action because water isn’t currently seen as an organisational priority. Whatever your start point, experience demonstrates the need for a strategic, well informed approach. This is why there’s now a variety of services to support organisations in optimising the benefits and opportunities that the open water market offers.”

So, which is the right option for your business? Here’s our guide to navigating the water market.

OPTION 1: IN-HOUSE PROCUREMENT

BEST FOR: Organisations that have a low water spend or lack the resource to play an active role in the new open market could consider conducting their own tender process.

ADVICE: Key to achieving best value from this route is accurate data on which to base negotiations with potential water suppliers. Focus resource on this prior to contacting retailers. Waterscan’s Water Check service is designed to help industrial and commercial organisations with a higher spend by reviewing a recent water bill for each site in your property portfolio and creating a clear report detailing opportunities for improvement that are specific to your organisation. Following this procurement option means you will rely on in-house experience and may lack the industry knowledge and expertise to fully maximise the opportunity.

BENEFITS:

  • Control the procurement process in-house.
  • Simple approach that requires little financial investment.
  • Follows existing procurement systems so minimal management buy-in required.

TIMEFRAME: Dependent on internal procurement practices, can be almost immediate by negotiating with your existing supplier

COSTS: Minimal. There is no charge for Waterscan’s Water Check service.

OPTION 2: OUTSOURCED WATER PROCUREMENT

BEST FOR: Organisations that want to utilise expert advice and knowledge when choosing the right retailer in line with their existing procurement systems, operational needs and sustainability goals. Every organisation with a higher water spend should benefit from this approach which offers independent analysis and a fully managed tailored tender process to maximise best value.

ADVICE: Seek a supplier who has extensive knowledge of previous water company and new retailer charging structures, the new legislation and considerable expertise. This will ensure you avoid unnecessary costs and select the right water retailer. With this support, a complete water consumption data-set is usually created as a start-point for retailer comparison. A tender process incorporating preparation, Request for Quotation (RFQ), shortlisting and analysis, contract negotiation and supplier transition then follows.

BENEFITS:

  • A cleansed portfolio and validated data set on current and historical water use.
  • Comprehensive end-to-end approach for informed, objective decision making.
  • Cost reductions and improved payment terms through optimised contracts.
  • Consolidated billing and reduced administration time.
  • Hassle-free managed supplier transition.

TIMEFRAME: 6 weeks from tender preparation to service transition.

COSTS: Check with your chosen supplier. For example, Waterscan takes no margin or commission to ensure transparency and to guarantee best value for clients in line with their long term strategic goals. Instead, a one-off fee is charged dependent on the level of service required.

OPTION 3: SELF-SUPPLY

BEST FOR: Organisations that want ultimate control over their water consumption and greater cost savings by dealing directly with wholesalers. It is suitable for large multi-site customers or high consuming organisations that will benefit from billing accuracy and the ability to directly influence the English water market.

ADVICE: Allow more time if you plan to take this route and ensure your chosen partner has direct experience of the licence application process due to its complex nature. It’s worth noting that there will be a requirement for active participation, including senior management, in the process. By working with a partner to obtain a self-supply licence you will be guided through all relevant licence application information and the whole process with MOSL and Ofwat is managed on your behalf. Once a licence has been granted, you will be in control of your water supply but with the full support of a managing agent to ensure licence compliance, billing validation, early resolution of wholesaler issues or emergencies and maximised efficiency savings.

BENEFITS:

  • Total support in obtaining and maintaining a water self-supply licence.
  • Complete control of your organisation’s water consumption and costs.
  • Direct access to the Central Market Operating System and wholesale prices.
  • Enhanced service delivery via direct relationships with wholesalers.
  • Consolidated billing and reduced administration time.
  • Self-defined meter reading and reporting frequencies.
  • Opportunity to influence the market and drive down costs across the industry.

TIMEFRAME: 2-3 months from preparation through to licence application decision.

COSTS: Currently a unique service offered by Waterscan. The company takes no margin or commission to ensure transparency and to guarantee best value for clients in line with their long term strategic goals. Instead, a simple charge per transaction is levied.

For more specific guidance on how your organisation can make the most of the open water market, email info@waterscan.com or visit www.waterscan.com