Business water price increase 2023 – how to protect your business from rising costs
Over the last year, businesses of all sizes have been affected by the rising costs caused by the energy crisis. Now in 2023, with water rates set to rise, businesses’ have yet more to consider.
Most businesses will receive a significant increase in their rates from April 2023. The specific increases will depend on your region and tariff type, but there are a couple of factors that are causing the increase.
A variety of elements including the ongoing energy crisis have caused UK inflation to rise to a 40-year high. Local water companies are facing a significant increase in their costs to operate their water infrastructure.
The second factor is a significant increase in default water rates most businesses pay. Ofwat, the regulator, has reassessed the calculation of their default price cap resulting in a 30% increase in the retail rates charged by business water suppliers.
The water rates paid by businesses are made of two separate charges:
Wholesale rates - The amount charged by the local water company for providing a supply of potable water and operating the local water infrastructure.
Retail rates - The additional amount charged by the business water suppliers for their role of providing customer services, meter readings and billing to their customers.
The underlying wholesale rates in water bills are likely to increase as the cost of operating water infrastructure increases with inflationary pressures.
Business water suppliers have the freedom to choose the retail rates they offer their customers as long as it is below the default rates price cap determined by the regulator Ofwat.
Since deregulation in 2017, businesses have had the choice to switch business water suppliers and agree to a fixed lower retail fee with any supplier in the market.
The vast majority of English businesses have never switched supplier, so they pay the “default water rates” with the default water supplier in their region.
The default water supplier in each region publishes their default rates online. Ofwat, the regulator, carefully controls these default retail rates these suppliers can charge with a price cap to protect businesses that have never switched.
The default water suppliers generally charge the maximum allowable under the default price cap, so the determination of the cap directly impacts most businesses.
Leading up to 1 April 2023, businesses on a default water contract shall receive notification that their rates are rising.
Businesses can avoid being hit by increased water rates by consulting our experts to find a deal that suits their business. Energy Geeks prides itself on putting the customer first to get the best rates. Get in touch here for a free, no obligation consultation.