As a business owner, the energy crisis and global recession are sure to have posed massive obstacles over the past few years. Not everyone has survived the various problems that have arisen over the last few years. If you have, you’re in a great position, but the fight isn’t over just yet.
We seemingly still have quite a ways to go before everything has calmed down and stabilised again. This article will strive to give you some insight into the situation so that you aren’t caught off-guard or unprepared. There are still measures you can take to ensure that your business’s water bills don’t increase too much.
Will There Be a Significant Rise in Business Water Prices in 2023?
Unfortunately, there seems to be more bad news on the horizon. Most businesses will experience an increase in their business water rates at the beginning of April 2023. How much your own rates will increase is dependent on the region you’re in and the type of tariff you pay.
What Happens Next?
In the lead-up to the new price increase being implemented, businesses that are on default water contracts will be notified that the rates are rising. The wise move to make here is to switch business water suppliers before you’re hit with an increase. Take the initiative and compare business water prices online. This will help you shop around for the best business water rates for your business needs.
Why are Busines Water Prices Rising?
One of the main reasons that water rates are going to increase is inflation. The UK is currently experiencing inflation at its highest level in the last 40 years.
This is due to the current energy crisis and other factors like political and economic decisions. This means that water companies have had to pay more to operate their infrastructure. The increase in the wholesale price of water will translate into higher bills for consumers, both domestic and commercial.
The other main factor causing the water prices to increase is that there’s been an increase in the default rates that most businesses have to pay. This has happened because Ofwat has reassessed its default price cap calculations. The result is that there’s now a 30% increase in the rates charged by business water suppliers.
This change means that water bills will increase by roughly 6.4%, and this is without factoring in inflation! This is an alarming rate of increase, and it means that businesses will have to pay more for the same amount of water.
How Do They Calculate Business Water Prices?
Understanding what you’re charged for can help you understand why prices are rising. It will also help you in the event that you want to switch business water suppliers. Business water rates consist of two separate charges:
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Retail Rates
This is the amount that the business water supplier charges you for their role in providing customer service, billing customers and conducting metre readings.
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Wholesale Rates
This is how much the local water company charges for delivering water and taking care of the water-related infrastructure in the area.
So, the wholesale rates are going to increase due to inflation and the increase in operational costs on their end. Business water suppliers are free to decide on their own retail rates, provided that the rate falls below the default rate price cap set by Ofwat. Although business water suppliers are free to determine their own retail rates, the price cap set by Ofwat ensures that these companies do not overcharge their customers.
What are Default Water Rates?
“Default water rates” is a term used to refer to the water rates that are charged by the default water supplier in any region. Ofwat regulates how much they can charge under their default rates with a price cap.
If you’re still with your default water supplier, you should do your homework and see if there are better water prices elsewhere. Most of the time, default water suppliers charge the most they can within the price cap.
Final thoughts
The bad news is that business water prices will definitely increase in the first half of 2023. The good news is that this doesn’t necessarily have to significantly increase your business water expenses. If you’re well versed in your existing business water contract, you can easily switch water suppliers at the right time..
Shop around and compare business water prices to find a business water supplier that has favourable retail rates. While the wholesale rate is set to significantly increase, it’s up to independent suppliers to set their retail rates.
