Scottish Water's right to monopolise the market ended yesterday with more than 100,000 businesses and public bodies, such as local authorities, hospitals, schools etc. now free to choose from whom they buy their water and sewerage services, in a radical move that is being hailed as a world first for the water sector.

The regulator, the Water Industry Commission for Scotland (WICS), has been working to put the new competitive structure in place since the Water Services (Scotland) Act of 2005 paved the way for the break-up of the monopoly system run by Scottish Water.

Four suppliers have now been licensed to provide services to Scottish businesses – Satec, Aquavitae, Business Stream and Osprey Water Services  - with one more application, from Ondeo Industrial Solutions, currently under consideration.

Alan Sutherland, Chief Executive of WICS, hailed the introduction of choice in the sector as heralding a new era of improved services and competitive pricing.

“Scotland is leading the world in the introduction of a competitive framework for the water and sewerage sector. It is a system that has never been tried anywhere else in the world. Any company, of any size, from the smallest corner shop to an international conglomerate, stands to benefit from these changes.

We anticipate that choice will result in cost savings and service improvements as new licensees enter the market, as that is the only way they will encourage customers to switch suppliers.”

From April 1, all business customers and public bodies are eligible to switch water companies by making a phone call to their new chosen supplier. The rest of the process will be handled by the new supplier together with a new independent industry body, the Central Market Agency (CMA).

Apart from a competitive pricing policy, new licensees can offer a range of additional services including single source billing, water saving measures, leakage reduction, quality and consistency of supply, and fast reaction response. Environmental advice such as the use of grey water or off-peak pumping services, and individually tailored solutions that are geared to each user’s needs, can also be accommodated.

All the new water supply companies are also obliged to offer customers a basic default level of service, for a default tariff determined by WICS. The default tariff is no more than the maximum charge customers would have paid to Scottish Water if competition had not been introduced. The increase in the default tariff will be, on average, less than the rate of retail price inflation until 2010.

Several companies have already made the decision to switch, paving the way for more companies to switch supplier in the coming weeks.

Mr Sutherland said: “Choice is good for Scottish businesses and public bodies. Scottish Water’s retail arm, Business Stream, has already saved up to £10m in the run-up to April 1 to pass on to clients as they prepare for the competitive marketplace and we anticipate more in the future.

The market will continue to be regulated. If any supplier is in breach of their licence conditions then we have the right to revoke their permit to trade. What we have put in place is a competitive environment that will safeguard the environment and provide additional services at the point of need.”