UK Business Water Costs Soar with Huge Regional Differences

Water is an essential resource for businesses across industries, from agriculture and manufacturing to retail. But with wholesale water prices rising, businesses need to prepare for higher costs and take action to improve efficiency.

If your business is in England or Scotland, you can switch your retail water supplier—the company that manages your billing and customer service. But you can’t change your wholesale supplier (like Yorkshire Water or Thames Water), which looks after infrastructure and supply. Since wholesale charges make up most of your water bill, there’s little room to negotiate lower costs. Instead, businesses need to focus on water efficiency, leak detection, and reviewing their billing data to ensure they’re not overpaying.

How the Water Market Works

The non-household water market was deregulated in Scotland (2008) and England (2017), giving businesses the ability to choose their retail supplier. However, wholesale suppliers remain fixed, meaning that most of your charges are dictated by regional infrastructure costs rather than who your retailer is.

When the market first opened, data quality was poor, meaning some businesses are still being charged based on historical consumption data rather than their actual usage. If your business hasn’t reviewed its water billing in recent years, you could be overpaying due to outdated records.

Business Water Price Increases: The Facts

Business water bills are expected to rise by nearly 30% over the next five years. The main drivers behind this include:

• Infrastructure Investment: Ofwat has approved a £104 billion investment to improve aging water and sewerage networks.
• Environmental Compliance: Water companies must invest in reducing pollution and improving wastewater treatment.
• Inflation and Debt Servicing: Rising operational costs and financial restructuring are leading to higher wholesale charges.

(Source: Aquaswitch)

High Water Users: Are You Overpaying?

If your business is a high water user, you could still make significant savings—not by switching suppliers, but by checking that you’re being billed correctly.

Many companies are still being charged based on old data. This is particularly relevant for businesses that may qualify for specific allowances:

• Care Homes and Medical Facilities: Some care homes with dementia certifications are legally entitled to capped charges on certain costs. But if their records haven’t been updated, they could be paying more than they should.
• Manufacturing and Industrial Sites: Businesses that have switched to water-efficient equipment may still be charged based on previously higher consumption levels.
• Multi-Site Businesses: Inconsistent data across different locations can lead to avoidable excess charges.

What You Can Do:

1. Request a Billing Audit: Work with your retailer to check that your charges are based on accurate data.
2. Verify Eligibility for Discounts: Some businesses qualify for reduced rates but need to apply for them.
3. Check Your Metering Accuracy: If you’re being billed based on estimates rather than actual usage, you could be overpaying.

How Will Different Sectors Be Affected?

Agriculture

Farms rely heavily on water for irrigation, livestock, and food processing. Rising water bills could lead to higher operational costs and potential restrictions on water usage. To offset these costs, farms may need to adopt more efficient irrigation systems or alternative water sources.

Manufacturing

Water is vital for cooling, cleaning, and production processes in manufacturing. Food and beverage, textiles, and chemical sectors will see increased costs, which could impact profit margins. Investing in 

water recycling and efficiency technologies will be crucial.

Retail

Retailers may not use as much water as other sectors, but sanitation, refrigeration, and supply chains will all be affected. Businesses selling water-intensive products, such as textiles, will see higher procurement costs, while supermarkets and shopping centres will face rising operational expenses.

How to Reduce Your Water Costs

Since most water costs are fixed, the best way to save money is by improving efficiency:

1. Conduct a Water Audit: Identify areas where you can reduce usage.
2. Check for Leaks: Even small leaks add up to big costs.
3. Upgrade to Water-Efficient Equipment: Smart meters, water-saving fixtures, and recycling systems can lower consumption.
4. Harvest Rainwater: If practical, rainwater harvesting can help cut reliance on mains water.
5. Educate Your Team: Encourage water-saving habits among employees.
6. Review Your Billing Data: Make sure your charges reflect your actual usage.
7. Engage with Your Retail Supplier: While switching may not reduce costs significantly, a good retailer should help you spot potential savings.

Conclusion

Rising water costs will impact businesses across industries. While switching suppliers won’t lower your wholesale charges, businesses in England and Scotland can focus on efficiency, leak detection, and billing accuracy to keep costs in check.

High water users, in particular, should check that they’re being billed correctly—many businesses are overpaying due to outdated consumption data. By acting now, businesses can avoid unnecessary costs and stay ahead of future price increases.