How Commercial Water Bills Are Calculated

How Business Water Rates Work – Most businesses scrutinise their energy bills closely, but water often gets less attention. It arrives quarterly, gets paid, and moves on. For many businesses, that’s a missed opportunity, water bills are more complex than they appear, and since the English business water market opened to competition in 2017, there are genuine options to reduce costs that most businesses have never explored.

This guide explains how a commercial water bill is put together, what changed when the market deregulated, and what your business can do to make sure it’s getting a fair deal. If you are looking specifically for what you should be paying, see business water rates explained.

How a Commercial Water Bill Is Calculated

Unlike domestic water bills, which are often flat-rate or based on simple volumetric usage, commercial water bills are made up of several distinct components:

Standing charge – A fixed daily or annual charge covering the cost of maintaining the connection to the network. This applies regardless of how much water is used and is largely determined by meter size.

Volumetric water supply charge – The unit rate for water consumed, charged per cubic metre (m³). This is the figure most businesses focus on, but it’s only one part of the total bill.

Foul water drainage (sewerage) charge – A charge for the removal and treatment of wastewater. This is typically calculated as a percentage of incoming water supply, often around 90-95% on the assumption that most water used is returned to the sewer.

Surface water drainage charge – A charge for rainwater that falls on your site and runs into the public sewer or watercourse network. It is based on the rateable area of your site, not your consumption. Many businesses are overcharged on this component because their site area is incorrectly recorded – hard-standing, car parks, and roofs all contribute.

Highway drainage charge – Some water companies levy a separate charge for drainage from public roads adjacent to the site.

For most commercial premises, the combined drainage charges account for more than half the total water bill – making them at least as important as the supply rate when comparing options.

The Business Water Market – What Deregulation Means for You

In April 2017, the non-household water market in England opened to retail competition. This means that businesses, charities, and public sector organisations with premises in England can choose their water retailer, the company that manages billing, customer service, and metering independently of the underlying water infrastructure, which remains with the regional wholesaler.

The change was modelled on the earlier deregulation of the energy market and was intended to drive competition, improve service, and bring down costs for business customers.

In practice, the market has developed more slowly than energy.

There are fewer retailers, price differences tend to be modest rather than dramatic, and many businesses have never been contacted about switching.

But the opportunity is real, and for businesses with multiple sites, consolidating water billing with a single retailer can deliver both cost savings and significant administrative simplification.

Scotland deregulated its business water market earlier, in 2008. Wales and Northern Ireland remain regulated, businesses there cannot switch water retailer and are served by Dŵr Cymru (Welsh Water) and NI Water respectively.

Can Your Business Switch Water Supplier?

For the step-by-step process, see how to switch business water supplier.

If your business premises are in England and connected to the mains water network, you are almost certainly eligible to switch water retailer. The main eligibility criteria are:

The premises must be used for non-household purposes (business, charity, public sector)

The supply must be metered

The premises must be in England (or Scotland, where a separate competitive market operates)

Similar energy switching, water switching does not affect the physical infrastructure, the pipes, pressure, and water quality remain the same. You are simply changing the company that handles billing and customer service, and potentially the tariff structure applied to your consumption.

The switch is managed through the Market Operator Services Limited (MOSL) switching process and typically takes around 28-days.

There are no interruptions to supply.

What Determines Your Water Rate?

Several factors influence the rate a business pays for water:

Wholesaler region – The underlying network is still owned by regional water companies (Thames Water, Severn Trent, United Utilities, etc.). Wholesale charges differ significantly between regions and are passed through to all retailers in that area. A business in the South East will pay different wholesale rates to one in Yorkshire.

Meter size – Larger meters carry higher standing charges. If your meter is oversized for your actual consumption – common in older buildings where demand has changed – you may be paying a higher fixed charge than necessary.

Consumption profile – Businesses with high, consistent usage often have more negotiating leverage with retailers than low-volume users.

Surface water drainage assessment – As noted above, surface water charges are based on assessed site area. Errors are common, and a formal reassessment can reduce this charge permanently.

Retailer margin and tariff structure – Retailers set their own margins and may offer different tariff structures – flat rates, tiered pricing, or rates that vary by time of year. Comparing these requires more than a simple unit rate comparison.

How to Reduce Your Business Water Costs

There are several practical routes to lower water expenditure:

Go to market – Request quotes from alternative retailers. Even where the savings on unit rates are modest, better contract terms, improved service, or simpler billing can represent value. For multi-site businesses, a single retailer can eliminate significant administrative overhead.

Review your surface water drainage assessment – Check whether the area recorded for your site is accurate. If parts of your site drain to a soakaway, watercourse, or sustainable drainage system rather than the public sewer, you may be entitled to a reduction.

Audit your meter size – If your current meter is larger than your consumption warrants, ask your retailer about downsizing. Smaller meters attract lower standing charges.

Leak detection – Undetected leaks can add significantly to consumption-based charges without any corresponding business benefit. A leak audit particularly for older sites, often pays for itself quickly.

Sub-metering – For businesses with multiple uses on one site, sub-meters allow you to identify where water is being consumed and where the greatest efficiency gains lie.

How Catalyst Can Help

Catalyst works with businesses across the UK on energy and utility procurement. Water sits alongside energy as a utility cost that rewards active management, and most businesses have never benchmarked their water costs against the available market.

If you’d like a review how business water rates work for your current water arrangements, or if you’re ready to explore what switching retailer could mean for your business, get in touch.

Speak to Catalyst about your business water costs →