Ofwat and the Environment Agency are calling on authorised wholesalers and licensed retailers in the retail water sector in England and Wales to deliver greater water efficiency in the business sector.

The call comes in a joint open letter from Ofwat Chief Executive Rachel Fletcher and Harvey Bradshaw, Executive Director for Environment and Business at the Environment Agency.

Pointing out that in April 2020 it will be three years since the introduction of retail competition to the. business water market in England, the letter says that one of the main reasons for enabling business customers to choose their provider was to encourage and further improve water efficiency.

While the regulators acknowledge that some business customers are already actively pursuing more efficient use of water, they go on to say:

“We expect wholesalers and retailers to deliver improved levels of water efficiency in the non-household sector.”

“However - overall - offers and take up of water efficiency services have been small, which means the business sector is not currently playing its part in meeting national needs for delivering water on a long term, sustainable basis.”

The letter also recognises that there are challenges in improving water efficiency and reducing demand, with Ofwat reporting a number of inherent problems in the business retail market, including a lack of complete, accurate and timely meter reads, which can undermine retailers’ and customers’ ability to measure and manage water efficiency.

Challenges in improving water efficiency and reducing demand "can and must be met"

However, the challenges “can and must be met”, the regulators warn, pointing out that Ofwat, the industry and MOSL are working to address market frictions through a number of targeted initiatives and “Ofwat expects both wholesalers and retailers to fully support these initiatives.”

The letter also sets out further steps that wholesalers and retailers are now expected to take “as a priority” to improve levels of water efficiency and ensure the business sector plays its part in meeting national needs for delivering water on a long term, sustainable basis.

More collaboration needed between wholesalers and retailers

The regulators want wholesalers and retailers to work together to produce a joint industry plan of action.  This will also need to set out how they intend to work together to develop and deliver significantly improved levels of water efficiency in the business sector as part of the preparation for the next update of Water Resource Management Plans (WRMPs) by wholesalers which is due in 2024.

“Preparation for the next set of WRMPs is underway and we expect these plans to include ambitious water efficiency savings from the non-household sector,” the letter says.

Referring to the fact that some wholesalers have voiced concerns that they are “not permitted to act in the business retail market because of their obligations under the Competition Act 1998.” the regulators say:

“Provided wholesalers, retailers and other stakeholders act in compliance with competition law, we see no reason why they should not work together towards identifying and delivering ways for business.”

It also draws attention to coordination needed between wholesalers and retailers during unplanned events and incidents:

“We think more could be done to proactively reduce and manage the risks and impact of any supply restrictions. For example we expect wholesalers to gauge if and where restrictions on use may need to be prioritised, and to work with retailers to ensure this data is shared with customers in a timely manner.”

Ofwat and the Environment Agency now intend to monitor progress and also look at ways to improve performance if required, and would "welcome suggestions on what more could be done to further improve levels of water efficiency in the non-household sector - both from industry as well as other stakeholders.”

Click here to read the letter in full