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Ofwat consults on new retail licences

Ofwat has launched a new consultation on changes to water company retail licences which are proposed to pave the way for the opening of the non-household retail market in 2017.

Ofwat has launched a new consultation on changes to water company retail licences which are proposed to pave the way for the opening of the non-household retail market in 2017.

The proposals envisage separate licences for water retail and wastewater retail, but with standard modular conditions, following the precedent of Scotland. The new license would allow holders to operate in the joint Anglo-Scottish market.

In order to ensure a level playing field between existing and new retailers, the consultation proposes scrapping in-area trading bans, which currently prevent licensees competing for commercial business in regions where their own company is the wholesaler.

The regulator also plans to allow the granting of self-supply licences, under which customers can become their own water retailer.

Ofwat proposes to keep the same three principal criteria used when judging the granting of a licence - financial stability, managerial competency and technical competency – and to assess licenses over the same time period, 50-60 days. Current license holders will have a “simplified application process”. The consultation sets out tighter requirements for the annual ‘Certificate of Adequacy’ licensees must provide to Ofwat. This is to ensure customers are protected should a retailer find itself without the resources to do its job properly – for example, by taking on more customers than it has the capacity to handle.

The proposals also outline plans for an auction-style allocation process – similar to that used by energy regulator Ofgem – in the event of the financial failure of a retailer.

“The introduction of retail competition is an important project for all stakeholders,” said the consultation foreword. “First and foremost, it will allow eligible non-household customers to receive the same benefits in terms of price and service that their counterparts in Scotland already enjoy. Successful delivery will also demonstrate that the industry is capable of implementing change and help maintain customer confidence and trust. Delivery of the new market requires a number of substantial programmes of work. With Market Operator Services Limited now established and gaining visibility and acceptance among market participants, the expedient progression of the procurement of the central systems necessary to support the new market is now underway.”

The consultation can be viewed here: the deadline for responses is July 20th.

Author: James Brockett,
Topic: Policy & Regulation
Tags: retail , ofwat

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