EDINBURGH-based corporate water company Business Stream is planning a cross-border raid as it eyes opportunities that could come with reform of the English water market.
The company, a division of taxpayer-owned Scottish Water, already has a handful of staff operating south of the Border on top of its bases in Edinburgh and Glasgow and it plans to establish a permanent office in England.
Full market liberalisation of the English water market could be as many as four years away.
However, Business Stream is already touting its wares to potential customers and snapping up contracts in the limited part of the market that is already open.
It is also preparing the ground for potential acquisitions or joint ventures that could help it make inroads into the English market.
Chief executive Mark Powles told The Herald: "There are different approaches. We could go down with a large marketing budget and grow customers, we could leverage existing relationships, or we could acquire clients."
Mr Powles argues that consolidation of the English water sector, which is currently operated by 21 integrated water boards, is inevitable after liberalisation.
"I do not know how many companies are appropriate. Six? 12? It definitely is not 21."
However, he also believes there could be alternative models that would allow Business Stream to work with the retail side of existing water companies.
Business Stream, which employs 250 people, argues its experience in Scotland, which has the only deregulated corporate water market in Europe, will give it an advantage if and when similar reform comes to England.
A number of Business Stream's clients, including East Kilbride-based Robert Wiseman Dairies, use its services in Scotland and could be persuaded to hire it for sites in England.
It also has limited contracts with some companies south of the Border, for whom it provides consultancy services.
Under the current English system, only businesses that use five megalitres of water on a single site, the equivalent of a department store or a football stadium, are entitled to switch supplier.
A white paper on reform of the English water market was published in December.
There is some doubt about whether legislation will be contained in the forthcoming Queen's Speech and it could be delayed until 2013.
Implementation is likely to take another three years.
Mr Powles is well aware of opposition to deregulation in much of the water industry but believes there could be cross-party support for reform in Parliament.
He said: The rear guard action to stop it in its tracks has gone. They would like to slow it down."
But he maintained: "It is a question of when, not if."
Mr Powles also hopes that legislation will provide more clarity on whether and how there could be consolidation of the water sector, noting that the energy market saw substantial takeovers and mergers following liberalisation.
He is adamant that business practices in the English water market will have to change following liberalisation.
Business Stream had a 100% market share when the Scottish market was liberalised in 2008.
It had developed services, such as helping companies improve water usage and unified billing, in an effort to prove the value of its services.
This, Mr Powles, believes has been the key to keeping its share at 95% despite competition from around half a dozen rivals.
Similar improvements to customer service will be necessary south of the Border, he believes, when companies become able to switch supplier.
Business Stream's move comes after Scottish Water's fledgling international division last month unveiled a partnership with engineering company ECM Group Polska to offer expertise to some of Poland's approximately 700 water utilities on their infrastructure.
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