Tom Melhuish 6 min read

Understanding business water rates

Businesses and organisations in Britain pay for water rates under the non-household charge regime. The non-household market is open, allowing suppliers to determine the water rates charged to customers.

However, all suppliers across Britain must charge for water rates using the same breakdown of charge categories allowing direct comparison between one water bill and another.

Our guide explains each category of water rates that appears on business water bills.

How are business water rates calculated?

Business water rates are made of two components:

  • Retail fee – This is a charge levied by your business water supplier for providing customer services to your business. In the deregulated water market, suppliers choose how large this fee is. Companies can save on water rates by switching to a water supplier with lower business rates.
  • Wholesale water rates – These are fees charged by the company that maintains the water and sewerage network in your region. These wholesale rates are charged to your water supplier, who passes them through directly to your business water bill.

This article explores the different components of the wholesale business water rates that are charged to non-household properties.

Potable water standing charge

Also sometimes known as a metering charge, the potable water standing charge is a fixed daily charge that will be invoiced to your business, regardless of whether any water is used. The charge is applied to all properties to maintain the external pipes and pumping systems that supply water to properties across the region.

The size of the potable water standing charge depends on your business’s region and the width of the clean water pipe that connects to your property.

Potable water metered rates

The potable water rates depend on the amount of clean water supplied to your business property. Simply put, the more water your business uses, the more you will be charged.

The water meter at your property will measure the volume of clean water that passes through the pipe into your property. Your business water supplier will take regular readings from the water meter so that they can calculate how much to bill you.

On your business water bill, the volume of water used by your business is multiplied by a volumetric rate. The volumetric rate is the charge for each meter cubed of water supplied.

Wastewater standing charges

Wastewater is any water that leaves your property through the wastewater pipes.

The standing wastewater charge is another fixed daily charge levied to all properties regardless of whether the property produces any wastewater. The charge pays for the maintenance of the sewage system your property uses.

Wastewater metered rates

Like the clean water volumetric charge, businesses also pay for every cubic meter of wastewater flowing into the sewers.

Most water suppliers assume that all clean water supplied to your business premise eventually ends up in the wastewater system. The water company can use the meter readings on the potable water pipes to determine the wastewater charges.

If your business uses a lot of water in its operations, it may mean that significantly less water returns to the sewers. If this is the case on your water bill, your supplier should apply a “return to sewerage” factor to reduce the wastewater rates. If this isn’t happening, we recommend that your business conducts a water audit to see if you can reclaim historical overcharging from your supplier.

Surface water drainage rates

Businesses pay for removing rainwater that lands within the property’s boundary and ends up in the drainage system. Being charged for rainwater, especially in Britain, may seem unreasonable, but maintaining the drainage system is essential to avoid flooding and is an important and costly role of the water network.

The way water suppliers approach charging for surface water drainage varies significantly and is inherently judgemental. It depends on the area enclosed by your property; the larger the property, the higher the drainage charge.

If your business has a high surface water drainage charge, we recommend conducting a water audit to ensure you are being billed fairly for drainage. Water audits often identify problems with the surface water drainage that allows reclaims from suppliers for historical overcharging.

Highways drainage rates

Rainwater landing on public roads and footpaths also gets funnelled into the drainage system. Water suppliers charge highway drainage rates to cover the costs of maintaining the highway drainage network.

Everyone uses public roads, but the government chooses to pay for the drainage system maintenance through water bills. To keep this fair, a water supplier will charge an equal amount to each property in its region.

If a property is not connected to the sewers, it should not be charged a highway drainage charge.

Foul sewage and trade effluent

Trade effluent is any liquid waste other than surface water and domestic sewage discharged by a business. An example being waste products from food production. The vast majority of companies do not produce trade effluent and will therefore not be charged for this.

Trade effluent charges are highly complex and dependent upon the nature of the effluent. Our comprehensive guide to trade effluent helps explain the subject.

Miscellaneous business water rates

Businesses can face a number of miscellaneous additional charges from their water network provider. The main categories of charge are as follows:

  • Assessment of business water rates – You can request that your wholesaler reviews your current water rates for accuracy with a site visit. Your regional water wholesaler will look to cover the costs of this assessment.
  • Disconnection charges – If you request that your property be disconnected from the water network or your supplier disconnects your business due to non-payment of bills, they will charge for the required work.
  • Reconnection charges – Equally, when you request for your business to be reconnected to the water network, your wholesaler will charge for the physical act of reconnecting your supply to the water network.
  • Meter installation, repair or replacement charges – A water wholesaler will look to pass on costs associated with physical work requested regarding the water meter at your business premises.

How much are business water rates in my region?

Business water rates vary from region to region. The disparity arises because the cost of maintaining the regional water network is higher in certain parts of the country than in others. As an example, there is less rain in the South West of England, and the region is sparsely populated. Hence, pipes need to travel long distances between reservoirs and properties, making water supply more expensive.

Each regional water network determines its own wholesaler charges. In Scotland, there is only a single wholesaler, Scottish Water. In England, the different regional water networks are:

Water and wastewater regional wholesalers:

  • Anglian Water
  • Northumbrian Water
  • Severn Trent Water
  • South West Water
  • Southern Water
  • Thames Water
  • United Utilities Water
  • Wessex Water
  • Yorkshire Water

Water only wholesalers:

  • Affinity Water
  • Bristol Water
  • Portsmouth Water
  • South East Water
  • South Staffs Water
  • SES Water

How much are the average business water rates?

The water rates paid by businesses in Britain depend both on region and the amount of water consumed. There are 1.2 million English and 0.3 million Scottish properties registered on the non-household water network. The average business water charge for these properties is £2,000 per annum.

Is there VAT on business water rates?

That depends. Generally speaking, industries that use lots of water in production or manufacturing are charged VAT whereas the supply is zero-rated for others.

Check out our VAT guide for the industries that pay VAT on their water bills.

Microbusiness water rates

Upon deregulation, properties paying business water charges were assigned a SPID and moved into the deregulated water market. If a property paid both business rates and council tax, it was a mixed-use premise and continued to be charged as a household.

Household water rates are fixed by the regulator and provided by the local wholesaler, the business responsible for maintaining the water network in your region.

This means that smaller businesses often continue to pay household rates. Water charges can only be levied by one fixed supplier in the household market, and the regulator ultimately determines prices.

A business that doesn’t have a water meter will also be treated as a household and be charged a pre-determined amount, usually based upon the value of the premises. This is known as the ‘rateable value’.

Suppose you believe your business premise should be charged as a non-household. In that case, we recommend speaking to your local supplier who can arrange for meter installation so that your property can join the non-household network.

Are business water rates cheaper than domestic?

It depends on the situation. The average business water annual cost is larger than households, simply because most businesses use more water than most homes.

Domestic water consumption is not measured by the water network. Instead, a household is charged based upon the property’s rateable value, similar to the way council tax works. Unless you specifically request a water meter for your house, a water supplier will charge your home a fixed cost for water regardless of how much water you use.

In contrast, business properties are charged for water rates based upon measurements taken by water meters installed at the properties. A business property that uses little water may be charged less than the rateable charge of a similarly sized household property.

For domestic and retail properties, the amount you pay for water largely depends on the underlying cost of providing clean water and removing wastewater for your property.

Can I save money on business water rates?

Yes. The water market for non-households in Britain is deregulated, meaning businesses can switch from one supplier to another. Business water suppliers add a retail fee to the underlying wholesale water rates for the customer services they provide.

The retail fee forms a significant part of business water bills, so it’s worth comparing your current water rates to alternatives from different suppliers.

AquaSwitch provides a free water rates comparison service to help businesses across Britain get the best deal. Ready to start saving on your water rates today?