English Water Deregulation: the competitive advantage available for commercial properties
The 1st April marked the launch of water deregulation across the country. The move presents a competitive advantage for commercial tenants and landlords who are savvy and take control of their water supply in a similar way to choosing an energy provider. With the potential to significantly improve the bottom-line and enhance the energy efficiency of buildings and estates, professionals should be engaging in the process right from the start.
The deregulation of English water means that all commercial properties in England (c 1.2m businesses with water meters) will have access to a choice in supplier for the first time, and able to either re-negotiate their contract or switch from their incumbent. Recent research from Utilitywise suggests that over half (53%) of English businesses are likely to switch supplier. It’s certainly a welcome break for business, who have felt the increased burden arising from business rate rises and the uncertainty around a post-Brexit future.
This freedom to negotiate better deals, multi- utility bundles, and a single supplier for multiple locations will result in economic, time and environmental efficiencies, enhancing the green credentials and viability of commercial real estate across the UK. We expect this to be a game-changer for the sector, across offices, retail, leisure and hospitality portfolios.
England is following the path of Scotland which deregulated water back in 2008 and has seen impressive savings to commercial property portfolios. A well-known high-street retailer with over 3,500 sites, 400 of which are in Scotland, switched to a new water supplier post-deregulation and has seen water savings of £145,000 per annum, and over £55,000 of savings from water efficiency. This trend is set to repeat itself across England now that water deregulation has come into force. Encouraging signs from new entrants to the market such as Everflow have demonstrated water savings of up to 14% can be possible depending on the location of the customer, showing that the success seen in Scotland can happen south of the border.
There are many clear benefits of water deregulation for customers, including reduced water charges, improved service, and consolidation of accounts; all of which will be particularly beneficial for multi-site, multi-region businesses. We should also see new entrants to the market in the coming weeks who can offer great value packages and tailored deals to commercial tenants and landlords, as well as service providers and consultancies such as Utilitywise offering wide-ranging and money-saving utility audits.
Companies should not view these positive water changes in isolation, but instead take a full view of the new utilities market and suppliers. Inspecting bills holistically will ensure the best rates are applied to commercial real estate portfolios. It is anticipated that there will be new propositions and a range of aggressive acquisition and retention plays across the utilities sector in the next few weeks, many offering combined energy and water packages.
“Bundling” of utilities also gives companies greater clout in negotiating combined gas, electricity and water savings. We’ve estimated that companies will be able to save up to 14% on their water bill after deregulation, and by adopting energy control solutions across all utilities, huge savings of 25% or more can be made. Bundling also opens up greater opportunities for monitoring energy and water usage on one platform. Utilitywise, for example, offers a feature whereby companies can view all utilities usage on a phone or tablet on one smart platform. In this way, businesses can manage utilities usage directly, plus educate staff to do the same. For instance, by using smart energy controls, a retail company achieved savings of 15% on store lighting alone in the first year, equivalent to over 3,100 tonnes of carbon. A further 10% was saved through cutting energy usage and moving usage hours to off-peak periods, resulting in lower bills. This reduction of 10% amounted to a saving of £150k.
Yet awareness of these available savings is low. A recent independent survey conducted for Utilitywise by research firm Edelman Intelligence showed that 70% of English businesses wanted a combined energy and water proposition; but only 24% felt they were well informed and just 40% of businesses were aware of deregulation. This presents a sizable barrier to companies making the most of the new operating environment, and we need to ensure that the message is getting out there to the market, loud and clear.
Data collection and intelligence is transforming the way we run buildings, with energy cost savings and reduction in carbon emissions placed front-and-centre. Consumption insight is changing the way we think about buildings and at Utilitywise we take data insights and energy expertise to unearth how our customers can find hidden savings through load shifting, load shedding and capacity reviews.
By giving companies more control over how much water, gas and electricity their property uses, tracked against the previous week, month, and year, companies can rank sites against each other and understand where inefficiencies are happening and why. Businesses can also track out of hours energy usage, and measure it by square footage.
The deregulation of water has provided the last piece in the puzzle for a combined and efficient utilities solution for businesses and commercial properties up and down the country. I would urge all companies, whether large or small, to realise the opportunities water deregulation brings and take more control over their utilities.
The phase of deregulation will allow companies to strike while the iron is hot. With incumbent suppliers looking to defend market share, new entrants will be adopting aggressive pricing models to establish themselves. This offers potential additional savings for business customers, and Utilitywise will be keeping a close eye on suppliers and tracking emerging trends so we can provide businesses with a transparent view of the best deals and services in the market, and the support to either renegotiate or switch supplier to realise significant savings.
Brendan Flattery is CEO of Utilitywise, the leading utilities consultancy in the UK offering independent, impartial advice and expertise to companies whatever the size.