Mitigating Rising Water Tariffs: Essential Tips for Businesses

Welcome, Net Zero News readers! Today, we bring you a crucial update on the impending changes in water tariffs across the UK, set to take effect in April 2025. With price increases projected to range from 25% to a staggering 50%, depending on the region and type of tariff, the implications are significant for businesses and households alike. This shift comes as a result of the recent water price review, known as PR24, conducted by the water regulator OFWAT, which occurs every five years.

As we delve into this pressing issue, it’s essential to understand the broader context surrounding these price hikes. Water companies are currently challenging OFWAT’s final determinations, advocating for higher increases to facilitate a significant uptick in investment within the water sector over the next five years. In anticipation of these adjustments, water wholesalers have pre-emptively incorporated some of these five-year increases into the tariffs set for April 2025. It is important to note that these increases do not factor in external variables such as the Retail Price Index (RPI) or the ongoing energy crisis, both of which could potentially lead to even steeper price hikes in the near future.

Given these anticipated cost increases and the transformative changes occurring within the water sector, it has become imperative for businesses to closely monitor their water usage. By implementing effective water strategies, companies can better mitigate the impacts of these price rises.

Water Efficiency: A Strategic Focus

As water costs continue to escalate, enhancing water efficiency emerges as a critical focus for businesses. Innovative technologies, such as Automatic Meter Reading (AMR), facilitate remote data collection and real-time monitoring, enabling businesses to swiftly identify leaks or inefficiencies. Although the adoption of Water AMR is still in its early stages, it represents a vital tool for organisations aiming to gain a comprehensive understanding of their water usage patterns and discover potential savings.

Robin Gregory, Head of Water Audit at Inspired, highlights the significance of conducting water efficiency audits at selected locations to pinpoint areas where consumption can be reduced. These audits may involve the installation of water-saving devices or the detection of leaks that previously went unnoticed due to infrequent meter readings. By focusing on specific sites, businesses can achieve immediate savings and utilise these insights to drive further water efficiencies across their entire estate.

In light of the current market dynamics, Robin emphasises the age-old adage: “you can’t manage what you can’t measure.” Despite advancements in technology, the water market lags behind other utilities in terms of digital monitoring, resulting in data gaps that can lead to costly inefficiencies.

One notable example of harnessing the potential of Water AMR comes from Aldi UK. By collaborating with Inspired through a comprehensive cost-benefit analysis and pilot scheme, Aldi UK is rolling out a nationwide Water AMR programme, which will enable remote weekly readings for its stores. This initiative will empower Aldi UK to track water consumption more effectively, identify high-consumption locations, and quickly flag potential wastage or leaks. Additionally, these readings will be shared with Aldi UK’s water retailer, ensuring accurate monthly billing.

Moving Towards Sustainable Water Usage

As the water sector evolves and businesses increasingly prioritise sustainability, enhancing water usage will likely become a fundamental component of broader environmental goals. Reducing water consumption not only leads to lower water bills but also contributes to a reduced carbon footprint, an aspect that is becoming ever more pertinent as environmental regulations expand their focus beyond energy usage to encompass water as well.

In addition to scrutinising tariffs, businesses should explore water-saving projects, such as rainwater harvesting or the installation of boreholes. Robin notes that with the rising cost of water, these alternatives are becoming more financially viable. Rainwater harvesting can effectively diminish dependence on mains water, thereby reducing overall water bills, while boreholes may provide a reliable, long-term water supply for businesses in regions where water costs are surging.

Aldi UK is not just stopping at Water AMR implementation and tariff audits; the company is continually seeking ways to enhance its water stewardship practices as part of its broader sustainability objectives.

Identifying Opportunities to Mitigate Costs

Amy Dalton, Head of Water Procurement at Inspired, points out that a significant portion of businesses have yet to fully engage with the water market, despite the deregulation that took place in England in 2017. “Many non-household customers have not switched their water retailers, which limits their ability to take advantage of potential savings,” she explains.

With rising prices, a competitive tender process is becoming increasingly vital. Although savings from switching retailers have historically been modest, the current tariff hikes mean that the benefits of market switching could be substantial. The impact of these price changes will resonate across all sectors, but industries with high water usage—such as manufacturing or large facilities—will bear the most significant financial burden. Many of these businesses may find themselves on complex tariffs, making this an opportune moment to review their current arrangements to ensure they are on the correct tariff.

Aldi UK has proactively incorporated regular water tariff audits at its sites, particularly focusing on new stores to avoid overcharging. This forward-thinking approach helps Aldi UK stay ahead of rising costs and sidestep potential billing errors.

Robin recommends pursuing a “no-win, no-fee” water audit, which can be an effective strategy for ensuring that businesses are paying the correct amounts for their water consumption. These audits can uncover discrepancies, identify potential refunds, and reveal opportunities for tariff optimisations that can lead to meaningful cost reductions, thereby unlocking funds for reinvestment into further sustainability projects.

For businesses with substantial water consumption, additional measures can be adopted to optimise usage. For instance, Aldi UK has implemented devices at its Regional Distribution Centres to provide half-hourly data, a necessity given the larger scale of water usage at these locations.

Keeping Pace with Market Changes

Amy underscores the importance of businesses maintaining engagement with the water procurement market, even if they have already transitioned to a competitive contract with a water retailer. “Price comparison is crucial, and even if you’re satisfied with your current retailer, it’s important to regularly benchmark offers to ensure you’re getting the best deal,” she advises.

For Aldi UK, ongoing reviews and innovations—including the continuous rollout of Water AMR and smart data monitoring—are key to mitigating the impacts of rising water costs. These initiatives, along with the persistent tariff audits, are paving the way for Aldi UK to achieve long-term cost management success.

Conclusion: Preparing for the Future

In conclusion, while the impending price hikes pose challenges, numerous strategies exist for businesses to alleviate the impact. Aldi UK’s strategic initiatives—encompassing market switching, tariff reviews, the adoption of AMR technology in the UK, and the pursuit of water-saving projects—illustrate how companies can remain proactive in the face of rising water costs while simultaneously contributing to sustainability goals. By taking decisive action now, businesses can mitigate the financial burden of increased water tariffs, positioning themselves advantageously for future market changes.

This article is brought to you by the water monitoring experts at Inspired PLC, the UK’s leading energy and sustainability advisor. If you’re seeking assistance with managing water and wastewater services, we provide a range of solutions to help optimise your water strategy. Visit our website for further information.

This article appeared in the upcoming March 2025 issue of Energy Manager magazine. To stay informed, subscribe here.