Stop Your Profits Dripping Away: Business Water Management Tips
Business water costs increasing
Although it may seem a distant memory after the drenching of last summer and the snow of winter, it was less than a year ago that many UK water companies were imposing hosepipe bans and warning of long-term water shortages. To cope with the increasing unpredictability of our rainfall, significant (if belated) investment is being made in the UK’s water infrastructure which is feeding through to higher bills for businesses and consumers.
Unlike energy, deregulation of the water industry did not introduce competition to the water market, however, leaving regional suppliers with local monopolies over water and sewerage services. And while water costs may not be exposed to the same price volatility as energy, this doesn’t mean that business users cannot proactively manage their water use and costs, cutting both consumption and costs through detailed tariff and volume analysis.
The first step must be to ensure you’re not over-paying for your supplies. Water and sewage costs in the UK are determined by set tariff structures, precluding the opportunity for users to negotiate directly with their supplier. These tariffs, usually published on 1 April and lasting for 12 months, are becoming increasingly complex however, often composed of the following separate charges:
- Water supply
- Water meter standing charge
- Foul sewerage removal costs
- Foul sewerage standing charge
- Rateable value or area based surface water drainage charges
- Highway drainage charges
- Trade effluent charges
A priority in managing your water costs is therefore to understand the volumes of water and sewerage currently being purchased, benchmarking these volumes against the all available tariffs from your water company. This process ensures that the correct charges are being applied based on your actual usage, identifying both opportunities for cost savings in the future and refunds for any historic over-charging.
As water volumes and tariff structures change this review should be conducted annually to ensure you continue to pay the correct price.
Tariff analysis also helps to build a profile of your operational water and sewerage use, identifying additional saving opportunities, often from trade effluent, and sewerage charges, as well as meter sizing.
For instance, a site currently used for warehousing may previously have been home to water-intensive manufacturing producing high volumes of trade effluent and generating significant costs. The change of use to warehousing should mean that the water meter (inflow) can be reduced in size and trade effluent charges cut, bringing immediate and long-term cost reductions – but only if the new usage is assessed and reported to the water company.
Reduce water consumption
Having ensured that you’re paying the correct water and sewerage tariffs, the next stage in managing water costs is to reduce the volume consumed through the elimination of waste and introduction of new technologies.
Only by understanding your current water and sewerage volumes can you begin to eliminate waste, which is most easily done through benchmarking of volumes against similar facilities within your own organisation or those of other companies.
The benchmarking is usually based on understanding the factors driving consumption, for instance the number of people using a building, or the type of manufacturing process (eg bread or concrete). Analysing usage data against similar facilities can quickly identify anomalies, directing an on-site survey to identify the specific causes of wastage (eg broken pipes, old/inefficient equipment) and what must be done for savings to be achieved.
This analysis can also assess the potential savings if waste reduction measures are introduced, identifying the likely payback period for any investment and prioritising activities.
The introduction of water saving technologies should also be assessed, including low flush toilets and automatic sensor taps, rain water harvesting and grey water recycling. These solutions generally have quick pay-back periods, qualify for Enhanced Capital Allowances tax relief, are usually easy to fit and can also reduce energy bills due to reduced demand for hot water.
A proactive approach to water management through tariff analysis, wastage elimination and the application of new technology ensures that your cost base is kept under control, freeing up cashflow and improving margins.