Tom Melhuish 3 min read

Deregulation of the British Water Market

Our guide to the deregulation of the British water market and what this means for business.

Privatisation in England and Wales (1989)

In 1989 the English and Welsh water sector was privatised creating the world’s first fully privatised water system. Ten for-profit regional water authorities were created to supply households and businesses. These were:

  • Anglian Water
  • Dwr Cymru Water
  • North West Water
  • Northumbrian Water
  • Severn Trent Water
  • Southern Water
  • South West Water
  • Thames Water
  • Wessex Water
  • Yorkshire Water

Privatisation is thought to have achieved higher levels of investment in the industry contributing to the high standards of water quality enjoyed by households and businesses.

Scottish water deregulation (2008)

Scotland was the first part of the UK to adopt the deregulated market for business customers. The change gave Scotland’s 130,000 businesses the right to switch from their supplier of water.

Scottish Water business customers were transferred to a newly created subsidiary, Business Stream. Upon deregulation, new water suppliers entered the market giving the customers of Business Stream an alternative supply. The new suppliers purchase water at the wholesale rate from Scottish Water and sell this to businesses along with additional services.

The introduction of competition into the market led to better service and lower prices for business customers.

Deregulation in England and Wales (2017)

In 2017 England and Wales followed Scotland’s lead and deregulated the supply of water to business customers. In response to the deregulation, the regional suppliers either created business retailing arms or they sold their business contracts to other licensed suppliers. Businesses were informed of the switch in their supply.

The current water market

Today all businesses in England and Scotland, and those of a certain size in Wales, can choose the supplier of their water and wastewater services. There are currently 21 licensed suppliers of water in England, 20 in Scotland, and 13 in Wales. These suppliers offer competing levels of pricing and service. The water market works in the same way as for electricity, gas, and telecoms with suppliers being separate from the management of infrastructure.

What is the effect of deregulation in the British Water Market?

Deregulation has introduced competition into the market, with the suppliers now competing for customers. Suppliers are incentivised to provide better customer service at a more competitive price, saving businesses money.

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