On the 1st April 2022, the wholesale charges for water are changing. Each year, wholesalers set the prices they charge for water and wastewater for the year.
The price is then checked and agreed with Ofwat, the water regulator. The new rates are then published on the wholesalers website in a document called a ‘Scheme of Charges’.
How is your water bill made up?
Fundamentally your water bill is made up in two parts. The wholesale charges cover the cost of getting the water to your premises, the cost of taking it away, and the treatment of the wastewater. The charge for this is made up from the price per cubic meter of water used, combined with the fixed charges, which also contribute towards the infrastructure needed to supply water.
The other element consists of a retail fee or percentage uplift. This fee covers the services provided by the Water Retailers which includes billing, meter reading, account management and customer support.
Why is the wholesale water price changing?
The price of wholesale water changes each year on 1st April, and the Wholesalers can either increase or decrease the costs. We are currently in the middle of a five-year pricing framework — the PR19 (Price Review 19) which will be reassessed in 2024 and will then be under the PR24 (Price Review 2024). This acts as a guideline to Ofwat to show on average what each water supplier plans to charge for the next five years.
Wholesalers can ask for up to a 5% increase however all changes must be approved by Ofwat. The suppliers can also request an extra increase to cover the cost of investing and to improve the service they provide to customers.
Although not all Wholesalers will charge the same. What you pay will depend partly on where in the country your business is located. If your business has multiple locations, then the price you pay for your water will vary from region to region.
How can this effect your business?
Unfortunately, there is no way to know whether the price will increase or decrease until the prices are published on the 1st of April. In England we have seen generally consistent rises of around 3-4%, while Scotland has held prices. However, to ensure you’re prepared, it’s best to budget for an increase. If the price remains the same or decreases, then the additional monies budgeted can be reinvested elsewhere.
Another way to reduce the cost of your businesses water is to implement an effective water management strategy to reduce consumption. Tackling high water bills through leak detection and identifying any tariff errors or unusual consumption can save your business thousands.
With 1 in 3 water bills containing errors, it’s always best to work with an expert consultant by your side who can offer solutions to reduce your consumption and costs. Learn more about our end-to-end water management services.
Speak to our experts today about how to reduce your businesses water costs on 01772 689 250 or email email@example.com.