The most significant choice your company has as a commercial water user is the right to switch water supplier, which means that if you are being charged excessively or provided with poor service, you can look around and use our switching services.
All too frequently, reminders appear of the failings of many providers, some of which have a domestic customer base as well. The problem in their cases is that there is no option to switch, so if they have a supplier that lets them down, they are stuck.
The latest reminder of how poor the performance of some suppliers is has come from water regulator Ofwat, which has just produced its Water Company Performance Report for 2024-25. This provides an overview of the performance of companies in the last financial year, their performance in the past five years, as well as their shortcomings.
What The Report Revealed
Describing the performance of the companies as “mixed”, the introduction to the report notes that there have been some overall improvements, such as a reduction in internal sewer flooding, with two companies cutting this by over 70 per cent in the past five years. However, by contrast, all but two firms have seen an increase in pollution incidents.
The summary also noted the one area where consumers can get some recompense for water company failings, with bill reductions being ordered by Ofwat. Over the last five years, this has seen over £700 million in refunds, including over £260 million last year.
You do not need to be a mathematical genius to observe that this means the latest year has seen higher refunds than average over the five years. That does nothing to suggest that the water companies are getting their act in order.
Two More Firms Fined
The latest enforcement action by Ofwat saw large fines imposed on Anglian Water and South West Water last month, both for failures to fulfil their obligations for wastewater treatment. The former company and its shareholders had to pay out £62.8 million, while South West Water was fined £24 million.
Commenting on the action, which had been confirmed after first being announced in July, Ofwat’s senior director for enforcement, Lynn Parker, said: “We understand that the public wants to see transformative change. That is why we are prioritising this sector-wide investigation, which is holding wastewater companies to account for identified failures.”
Domestic customers might welcome the fines and also any reduction in their own bills that comes about, but, given that Ofwat has had the power to fine water companies for many years and has not been afraid to use it, the question may be asked about when, or if, the action will make a difference. Will providers simply pay the fines and carry on failing?
Will A New Regulatory Regime Help?
The introduction of a new regulator, one of the measures promised by the Labour government upon taking office last year, will mean a shake-up at the regulatory level, with Ofwat being combined with the Drinking Water Inspectorate and the new body taking on some of the duties currently dispensed by the Environment Agency and Natural England.
It is to be hoped that this change in regulation will bear fruit, although its very creation indicates that Ofwat has not been able to get water companies to perform well enough, even with the substantial powers it already has, especially when it comes to levying large penalties.
This may highlight the benefit of the one thing that commercial water users can do, in being able to switch supplier if theirs is doing a bad job.
If water companies are failing to serve their commercial customers, they will soon lose them. This provides a greater incentive to get their act in order because the threat can become more existential if their customers switch en masse, whereas water companies relying on domestic customers have a captive base.
In this regard, the water industry differs from energy suppliers, where domestic customers can switch if they are unhappy with the prices or standard of service they are being charged. There is no indication yet that such a change could happen.
Make The Most Of Your Power To Switch
This places commercial users in a comparatively favourable position. The key thing to be aware of is that switching is not a very difficult thing to do, especially with the service we can provide.
No doubt the new regulatory regime will publish future reports highlighting the various performance trends of water firms and impose plenty of penalties. Whether this can deliver tangible improvements to the overall performance of the sector remains to be seen.
However, by being able to vote with its feet and switch, your company can always find a faster and more certain way to move towards a better deal.
