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The UK water industry looks set to undergo a revolution after a merger between United Utilities and Severn Trent was greenlit to go ahead. The merger, which joins the two largest water utilities in the UK, comes as the door opens for water sharing between the utilities, alongside an initiative that will, for the first time, allow businesses to choose which supplier they wish to use instead of being bound to an unchanging regional monopoly. In a few years’ time, public households are expected to adopt the changes as well.
However, this means far more than just allowing customer choice – the new ability for customers to choose their preferred providers regardless of area means territories that were exclusive to one provider can now be encroached upon by others, allowing for the kind of turf war seen in conventional business. As a result, the merger can be seen as Severn Trent and United Utilities attempting to corner the market before it opens up completely.
The resultant hybrid water firm, Water Plus, made it clear that they are prepared for an aggressive rush to gain a foothold in the newly-open water industry, but they aren’t the only ones gearing up for a fight.
Experts across the board are anticipating a flood of mergers, acquisitions and partnerships appearing between utility firms, as different companies maneuver to best exploit their changing circumstances, while existing utility providers are likely to use their existing presence and familiarity with customers, regions and connecitons in the area to branch out into water provision, creating a rush of new multi-utility companies.
At water advisory Atkins, Guy Ledger believes the change has come right on time. He told reporters this week that “the current UK water utilities madel hasn’t changed since privatisation, with nothing changing in 40 years. This is a great opportunity to see real change in the water industry. We’ll see some new entrants and existing companies grabbing hold of new possibilities, and I imagine other utilities agencies will start looking at the water sector after this point.”
Smaller, niche companies like Telecom Plus have already shown such multi-utiliy approaches for a while, with Telecom Plus’ representative company Utility Warehouse bundling electricity and broadband for years, while new starter Extra Energy is now offering insurance alongside its gas, energy and broadband offerings.
Whichever way it is spun, the water industry is changing, with definite shakeups coming and no easily predictable outcomes – water utilities companies will appear, merge, transform and disappear once the market is opened up, but for the customer, that is in no way a bad thing.