Tesco steps up to take advantage of watershed in utility charges

Tesco is set to be one of the first big companies to capitalise on a major change to water regulations that will save English and Welsh businesses £2bn over 30 years.

The supermarket chain has signed a deal with Business Stream, which was spun out from Scottish Water, to provide water at nine sites across England and Wales.

In 2017, businesses with operations in different regions will find it easier to use just one provider rather than getting bills from several monopolies. Under the current rules, around 26,000 businesses can choose to have just one supplier across different regions if the sites use more than five mega-litres of water a year – roughly the amount found in two Olympic-size swimming pools. From 2017 there will be no minimum usage, allowing 1.2 million businesses to choose their supplier, providing an incentive to offer better services and cheaper water in order to compete.

Companies north of the border have already saved £65m since Scotland introduced similar reforms in 2008. Business Stream is looking to take that experience to England and Wales and is already working with the turkey producer Bernard Matthews.

The Tesco pilot could eventually be rolled out to the supermarket's entire UK estate of more than 3,100 stores. This includes sites that use less than five mega-litres of water.

Business Stream's chief executive, Mark Powles, said: "There is nothing like the fear of losing customers to make you up your game."

Separately, Ofwat, the industry watchdog, said last week that Regina Finn, its chief executive, is to be replaced by rail regulator Cathryn Ross ahead of talks over what utilities can charge customers from 2015 to 2020.