Ofwat has said that retailers in the new non-household market must do more to make comparing offers easier for customers - only 1.4% of the 2.6 million water supply points have been switched to date.

The water industry regulator was commenting on new data published today by the market operator, Market Operator Services Ltd (MOSL) in its first CEO Quarterly Market Review of the first three months of the market.

The complexity of making comparisons, coupled with an ongoing lack of awareness among business customers, has no doubt contributed to the fact that only a comparative small number of switches have been made to date. During the first quarter, the 36,301 supply point switches which were processed represented only 1.4% of the 2.6 million supply points in the market. Over 10,000 of these occurred on the first day of the live market.

Around 21,000 of the switches have been of supply points using less than 1,000 litres a day, representing 58% of total switching activity in the quarter. The largest supply points using more than 13,700 litres a day (5 million litres a year) have shown a greater propensity to switch, with 4% of supply points in this segment having switched so far.

At the end of the first quarter, there were 25 wholesalers and 35 retailers in the market, of which 22 are national, 12 are regional and 1 is a self-supply retailer.

According to MOSL, which is jointly owned by all the water companies who trade in the retail water market in England, customers of all sizes are taking advantage of the opportunity to switch supplier, from the very smallest to the very largest.

Customers are also showing a strong preference for having a single retailer for both their water and wastewater services, with 95% of all switches either combining or keeping both services with one retailer. Only 2% of switching has resulted in water and wastewater services being served by two separate retailers

There have been around 35% more sewerage switches than water switches, largely due to previously water-only retailers acquiring the associated sewerage service for the supply point.

New entrant retailers have been active in the early stages of the market, gaining over 15,000 supply points during the first three months, representing more than 40% of total switches.

The report marks the first time that MOSL has released detailed information about the new market into the public domain. In addition to the CEO Quarterly Market Review, MOSL has also today published a set of data charts about the market to its website, which will be updated on a monthly basis. MOSL said it will start to publish market performance information publicly to enable effective competition, unless it is confidential or could be misleading.

MOSL CEO: there’s still much to do

Commenting on the first quarter’s activity, MOSL’s CEO, Chris Scoggins, said:

“Today’s publication is a demonstration of MOSL’s commitment to providing timely and relevant information to promote transparency and confidence in the new market.

“While it is early days, we are already seeing some positive developments, with customers of all sizes engaging in the market. That’s great news, but there’s still much to do.

“We at MOSL will continue to work with our members and other stakeholders to enable a successful retail water market to operate and evolve for the benefit of non-household customers.”

Ofwat tells retailers more needs to be done to make comparing offers easier

Commenting on today’s figures, Ofwat Chief Executive Cathryn Ross said:

“This first set of data is important because it gives us a baseline to monitor against and helps us to identify and address emerging issues.

“It is early days, but we are seeing some encouraging signs with new retailers, new deals, and, crucially, customers saving money and water.

“There have been more than 36,000 switches and around 60 per cent of those have come from low water users - more likely to be SMEs. That is significant, because we want to make sure this market works for all customers, not just the very large companies with specialist procurement divisions.

“In addition to those who have switched, we have heard that many others have agreed new deals with their current retailer.

“More needs to be done however; comparing offers is still not as easy as it needs to be and we have told retailers they must remedy this.

“We will continue to monitor the market closely to make sure it works for all and continue to meet and listen to customers, whose views will shape our work."

Consultants PwC are currently carrying out a market audit - PwC will publish an initial report on the market in November 2017 and provide early sight of its findings from the risk assessments and site visits which it will conduct over the next few months.