The business water supply market is already showing signs of cooling just six months after the regulator allowed companies in England and Wales to choose their water utility for the first time.

The second quarterly report showing business customer switching revealed that fewer companies chose to switch away from the regional incumbent supplier than in the first months of the programme.

The market operator said 25,010 account switches took place in the last three months, compared to 36,301 in the first months after the market opened.

The total number of switches represents just 2.3pc of the 2.7 million supply points in the market but the operator said the “steady rate” of switching will lead to busy months to come.

Emma Kelso, a senior director at Ofwat, said the number of new entrants into the market and the emergence of more innovative water deals, designed to keep customers from switching away, is a “promising” start for the competition drive which costs around £1.1m a year.

New entrants to the market, including Business Stream, have gained around 35pc of the supply points which switched this quarter. Those leaving the water industry’s largest suppliers accounted for 70pc of switching.