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Is this the cost of water deregulation by allowing customers to switch water supplier?

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With the English water market well underway allowing customers to switch water supplier, are single digit water retail market margins too much to bear for the water retail firms?

 

Some water retail companies are complaining there is insufficient margin particularly as the wholesale customer data is “not fit for purpose” when other water retail companies are happy with the margins.

 

A great many  water brokers or third party introduces TPI’s have many of the customers who would like to switch water supplier but there is not enough incentive apparently both from a customer perspective as the discounts on offer are so low or a broker commission perspective.

 

With the margins so low for the water retailer companies are they feeling the financial pain?

 

Southern Water have announced today it is shedding some 150 jobs as a part of an internal efficiency drive to cut costs. Interestingly the jobs to go will affect management and support positions based in the Worthing offices.

Southern Water claim this is a restructure of the business in en effort to build a resilient future for water in the south east.

Southern Water have also promised that water bills will be significantly reduced as a result of the changes.

 

One does have to wonder whether overall the customers want reduced water bills at the expense of the loss of 150 jobs!

 

Southern Water are also winding up the companies Cayman Islands finance subsidiary, it seems the pressure in margins due to water deregulation and the loss of tax advantages from their Cayman Islands operation is adversely affecting their profits forcing jobs to be lost even when they sold their water retail part of Southern Water to Business Stream.

 

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