New entrants winning business and state of the market improving, Ofwat finds
- by Karma Loveday
- Oct 13, 2024
- 1 min read
Updated: Dec 8, 2024
For the first time since the business water retail market opened in 2017, new entrant retailers have acquired the majority of switchers.
That was among the findings of Ofwat’s 2023/24 state of the market annual report. 54% of switchers moved to a new entrant – the first time non-incumbents have taken the majority of business. New entrants now supply 8.5% of all supply points, and grew their market share by 1.6% in 2023/24.
That said, the switch rate remained consistent (and low) at 3.4% of all SPIDs. As usual, major users (annual consumption over 50Ml) were the most active with a 14.8% switch rate compared to 2.9% of the smallest users (annual consumption less than 0.5Ml). However, Ofwat found the prices savings available to small customers had increased (see table).
Elsewhere in the report, there was positive news on the market frictions of poor quality market data and wholesaler performance, and complaints to retailers fell 6%, taking them below the level observed before market opening for the first time. There was also data on consumption by customer size.
Ofwat said it would continue to monitor the market, including to inform its next Retail Exit Code review which it anticipated starting in 2025 for implementation in April 2027.
New entrant retailer Everflow called the report a “milestone,” and said that it was “pleased to see the report recognise the progress and evolution that’s happening within the market, with new entrants driving innovation and growth, market frictions reducing, price savings increasing and customer satisfaction growing across the board”.
The findings from Ofwat’s 2023/24 state of the market report highlight some exciting developments in the business water retail market, particularly with new entrants gaining momentum. It’s great to see non-incumbents like Everflow driving innovation and pushing the market towards greater competition and customer satisfaction.
The fact that 54% of switchers moved to new entrants for the first time since 2017 is a significant milestone. It indicates that customers are becoming more willing to explore alternative providers, which could lead to more competitive pricing and better service standards across the board. The increase in market share by 1.6% for new entrants, although modest, shows steady progress and growing trust among businesses.
However, the low overall switch rate of 3.4% suggests…
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