In the first of a series of three Expert Focus articles for Waterbriefing, David Brown Vice President Europe at Gentrack, industry leader and specialist in CRM and billing software, examines the role of brokers in a reformed water market.

David Brown:The upcoming 2017 Water Bill is looming large, and the competitive retail market it will create larger still — English businesses and public sector bodies will soon be able to switch water suppliers at will.

The Bill is a game-changer for the sector that will foster competition and see innovative businesses across the industry thrive and improve service for customers. However, operating in a competitive environment is a novelty for water uti lities, and a potentially unpleasant one.

Many water utilities are well equipped to deliver new capital and infrastructure projects, but as it stands few offer the flexibility in billing, level of customer service or the new business savvy that will soon be required. While there is a raft of considerations for water utilities, one that is slipping under the radar is the increasing importance of brokers in the reformed market. As it stands, more than 90% of businesses that can currently switch water suppliers do so through a broker — in a fully competitive environment they will be one of the most important advocates and sales representatives for a water utility.

The energy market is well versed in managing relationships with brokers — nearly £1.3 trillion worth of energy is traded through London based brokers annually. The value of brokers is evident and as the structure of the UK water market will likely mirror that of the energy sector, they will without doubt play a pivotal role in the financial success of water utilities.

Brokers primarily act as an intermediary for price information, they help their clients accurately price a wide range of products and services. More importantly, brokers will not only provide cost comparisons from the retailers but offer consultative services to businesses that help to make significant savings on water bills by advising on procurement decisions, eliminating and recovering over payments and helping their customers manage their water consumpti on with detailed data reports and invoice analysis.

For water utilities, developing relationships with brokers and securing their advocacy is a vital cog in the new business machine. A key responsibility of the broker is to facilitate quick transactions which requires an acute awareness of market pricing — making this data available in a quick and easy to interpret format will be the water retailers’ primary function in the brokering arrangement. In real terms, it means utilities will need to have high performing billing and customer information soft ware in place in order to support brokers.

Brokers will be equally keen to create partnerships with water retailers as it is a highly lucrative market. It is also heavily scrutinised so utilities would be wise to develop voluntary codes of conduct that recruited brokers have to adhere to. Ofgem intends to impose a mandatory code of conduct for energy brokers that will require them to be completely transparent with their customers about their fees, the contracts they offer and which suppliers they represent. The water industry will no doubt follow suit and retailers will need to ensure that their business practices help brokers to meet the requirements — software again will play a pivotal role here.

Of all the considerations for water utilities, brokers will be sitting relatively low on the agenda at the moment, however their importance in a reformed competitive market cannot be understated. Water utilities need to ensure that they are in a position to leverage the influence of brokers come 2017 or they will quickly fall behind the competition.

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