Mark Powles, chief executive of Business Stream, the independent subsidiary of Scottish Water, has said that the new Water Act which came into force this week will force water companies to improve their services towards customers or face losing market share.

He was commenting after the new legislation was passed to bring competition to the £2 billion market which means more than a million English businesses will be able to choose their water supplier for the first time.

In Scotland, the non-domestic water market opened to competition in April 2008, since when customers have saved more than £36 million from their water bills by reducing the volume of water they use. More than £30 million of discounts have also been taken up by customers.

 The new market in England is scheduled to open to all customers in April 2017. At the moment, only the very largest users of water – those with sites consuming more than five million of litres per year – can switch supplier.

 Mark Powles commented:

“Competition delivers tangible benefits, and the market in Scotland can point to plenty of notable success stories. There’s every reason to expect customers in England will be able to use the choice they’ll have to drive the same kind of benefits.”

“The important point about retail competition is that what happens at a network and infrastructure level shouldn’t affect the service the customer receives at the retail end. If this market is successful then in a few years we’ll hear customers saying they’re getting a better deal than they are now, that they’re more aware of the role water plays in their businesses, and they feel more in control of the service they receive.”

Under the competitive market, though, a business with several sites across the country could switch all of them to one supplier, benefiting from associated economies of scale across billing and administration, as well as driving significant value from services like water efficiency initiatives and trade effluent management.

Such services, where Business Stream currently works with several businesses in England, are unregulated and already subject to competition.

 Mark Powles said customers using less than the switching threshold, but which might consider looking elsewhere for a supplier in 2017, should examine the water services they receive and consider what efficiency savings could be made.

He said:

“This shouldn’t be about Royal Assent and then nothing for three years. We’ve spoken to lots of customers who don’t feel as if they’re getting value from their regional suppliers, but can’t do anything about it because they don’t use enough water to switch right now.”

“The passing of this legislation should be seen as an opportunity for customers to put themselves in the driving seat now, so that when competition does kick in, they’re in a position to know exactly what they want and expect from their water company – and that’s bound to be more than just a bill.”

 A wholly-owned subsidiary of Scottish Water, Business Stream was formed as an arms-length company with its own board and independent management team.

Under the Water Services etc. (Scotland) Act 2005, Scottish Water had to split its operation into wholesale (Scottish Water) and retail (Business Stream) units. Although it remains part of Scottish Water, Business Stream works completely independently of its parent company.

 A number of the water companies in England are in the process of putting similar structures in place.