Water tariffs across the UK are set to rise significantly in April 2025, with price increases ranging from 25% to 50%, depending on region and tariff types. This price increase comes from the recent water price review (PR24) — a process carried out every five years by the water regulator, OFWAT.
Furthermore, water companies are challenging the final OFWAT determinations to appeal for higher increases. This is to support quadrupling of new investment in the water sector over the next five years.
In preparation, water wholesalers have front loaded some of these 5 year rises into April 2025 tariffs. These forward increases exclude factors like the Retail Price Index (RPI), and external circumstances, such as the energy crisis, which can prompt wholesalers to revisit and potentially request even higher price hikes.
Due to these cost increases and major water sector changes, it is crucial for businesses to understand their usage in more detail and implement effective water strategies to mitigate price rise impacts.
Water Efficiency: A Strategic Focus
As water costs rise, improving water efficiency becomes a key focus. Technologies like Water AMR (Automatic Meter Reading), allow for remote data collection and monitoring, helping businesses detect leaks or inefficiencies more quickly.
Whilst not yet widespread, Water AMR is an essential tool for businesses looking to gain a more granular understanding of their water usage and identify potential savings.
Robin Gregory, Head of Water Audit at Inspired, suggests that conducting water efficiency audits at selected sites can identify areas where consumption can be reduced.
This could include installing water-saving devices or identifying leaks that have gone undetected due to infrequent meter readings. These selected sites will likely see immediate savings and can be used to inform further water efficiencies throughout your estate.
With the current state of the market, Robin emphasises the importance of the age-old saying — “you can’t manage what you can’t measure”. Despite improvements in technology, the water market remains behind compared to other utilities in terms of digital monitoring, leaving gaps in data that can lead to costly inefficiencies.
Aldi UK has already recognised the potential of Water AMR. Working collaboratively with Inspired through a cost-benefit analysis and pilot scheme, Aldi UK is rolling out a nationwide Water AMR program, which will provide remote weekly reads for its stores.
This initiative, in partnership with Inspired, will enable Aldi UK to track water consumption more efficiently, identify high-consumption stores, and flag potential wastage or leaks. These readings will also be shared with Aldi UK’s water retailer, ensuring accurate monthly billing.
Moving Towards Sustainable Water Usage
As the sector evolves and businesses continue to focus on sustainability, improving water usage will likely become an integral part of broader environmental goals. By reducing water consumption, businesses can also lower their carbon footprint, which is increasingly relevant as environmental mandates expand beyond energy use to include water.
In addition to reviewing tariffs, businesses should also consider water-saving projects like rainwater harvesting or the installation of boreholes. “With the rising cost of water, these options are becoming more financially viable,” says Robin. Rainwater harvesting can be an effective way to reduce dependency on mains water and lower overall water bills, while boreholes can provide a reliable, long-term water supply for businesses in areas where water costs are escalating.
Aldi UK, in addition to its AMR rollout and tariff audits, is continually looking for ways to enhance its water stewardship practices as part of its broader sustainability goals.
Identifying Opportunities to Mitigate Costs
Amy Dalton, Head of Water Procurement at Inspired, explains that a significant portion of businesses have yet to fully engage with the water market, despite deregulation in England in 2017.
Many non-household customers have not switched their water retailers, which limits their ability to take advantage of potential savings,” Amy says.
A competitive tender process is more crucial than ever, especially with rising prices. While savings from switching have historically been modest, the current tariff hikes mean the benefits of market switching could be substantial.”
The impact of these price changes will be felt across all sectors, but those in industries with high water usage—such as manufacturing or large facilities—will experience the most significant financial burden. Many of these businesses may be on complex tariffs, meaning this is a good time for them to review whether they are on the correct tariff to begin with.
Aldi UK, for example, has incorporated regular water tariff audits at its sites, with a particular focus on new stores to ensure it is not overcharged. This proactive approach helps Aldi UK stay ahead of rising costs and avoid potential billing errors.
Robin recommends pursuing a “no-win, no-fee” water audit, as it can be an effective way to ensure a business is paying the correct amount for its water consumption. Audits can help identify discrepancies, potential refunds, and opportunities for tariff optimisations that can lead to meaningful cost reductions and unlock funds to be reinvested in further projects.
For businesses that consume significant volumes of water, further steps can be taken to ensure that water consumption is optimised. Aldi UK, for instance, have implemented devices at their Regional Distribution Centres to provide half-hourly data due to the larger scale of water usage at these sites.
Keeping Pace with Market Changes
Finally, Amy stresses the importance of businesses continuing to engage with the water procurement market, even if they have already made the switch to a competitive contract with a water retailer. “Price comparison is crucial, and even if you’re satisfied with your current retailer, it’s important to regularly benchmark offers to ensure you’re getting the best deal,” she advises.
For Aldi UK, regular reviews and innovations, such as the ongoing Water AMR rollouts and smart data monitoring, will play a key role in helping it mitigate the impact of the rising water costs. These projects, along with the ongoing tariff audits, are setting Aldi UK up for long-term cost management success.
In conclusion, while the upcoming price hikes may be challenging, there are numerous strategies that businesses can employ to mitigate the impact. Aldi UK’s strategic initiatives—such as market switching, tariff reviews, AMR adoption in the UK, and water-saving projects—demonstrate how businesses can stay ahead of rising water costs while contributing to sustainability goals. By taking action now, businesses can reduce the financial burden of increased water tariffs and ensure they are well-positioned to manage future changes in the market.
This article was written by the water monitoring experts at Inspired PLC; the UK’s leading energy and sustainability advisor. Want help managing water and wastewater services? We provide a range of solutions to help optimise your water strategy. Visit https://inspiredplc.co.uk/how-we-help/water/ for more information.
This article appeared in the March 2025 issue of Energy Manager magazine. Subscribe here.
