Pennon Water Group Services Ltd has submitted an application to Ofwat for a water supply and sewerage licence ahead of the opening of the non-household English market to competition in April 2017. The group believes it can take a top five position in the retail market.
Pennon has applied to the regulator for both water and sewerage retail authorisation. The Group said:
“Pennon Water Services intends to develop services for business customers across Great Britain, ensuring that we are ‘easy to do business with’. Our customer proposition is built on simplicity and transparency, with retail service plans and water hygiene, water efficiency and water management services to help customers save water and save money.”
The firm has already won customers out of area in Scotland and industrial customers at Fawley and Teeside.
Pennon to deliver growth by capitlising on existing Viridor customer base
In a separate document outlining its national non-household retail strategy, the firm said that it will deliver growth by leveraging the strength of the group, which owns South West Water, Bournemouth Water and waste management company Viridor.
Pennon is planning to capitalise on its existing 30,000- strong Viridor customer base, which it sees as offering a “significant competitive advantage”.
Its strategy will be to leverage its national footprint to obtain competitive advantage through Viridor’s 30,000 customer base – which it equates to around 90,000 accounts.
According to Pennon the commercial customer relationships and culture which already exist will provide a range of benefits to both the group and customers, including:
- Routes to market
- Operating synergies
- Joint customer proposition to secure Group position – savings on water bills can offset waste collection costs
Pennon: Viridor base could move PWS to a top five position in retail market
According to Pennon, leveraging the group’s national footprint offers it the opportunity to create an industry leader – the existing Viridor base provides enough scale to move PWS to a top five position. In particular, local authorities provide a platform for growth – Viridor’s key relationships with the top 14 local authority customers present an opportunity worth £54 million in revenue.
Source:Pennon Group
Pennon also believe that establishing scale creates efficiency and will further strengthen its position ahead of the potential introduction of household competition.
Pennon says it is creating a “credible national platform by bringing together five existing income streams”:
- Merger of South West Water and Bournemouth Water provides opportunity for larger, efficient retailer
- Generating annual £136m of turnover, £3m of net margin (determined by Ofwat)
- Current success with customer switching in Scotland
- Out of area successes with Industrial customers at Fawley and Teeside – retail services and complementary value-added activity
- Integration of existing businesses delivers operating synergies of c.10%
Ofwat has now launched a consultation on the application – deadline for submission of comments is 13th July 2016.
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