Ofwat ‘missing opportunity’ in PR19

Trade body claims D-Mex will fail to encourage competition in connections

Ofwat has been accused of missing an opportunity to address issues around competition in connections in PR19.

Fair Water Connections (FWC), which represents self-lay providers (SLP), maintains competition in connections is being constrained by water company behaviour, particularly in southern England.

It is calling on Ofwat to rethink the structure of D-MeX, a Developer Services Experience Incentive that will be introduced as part of PR19 and could be worth 5 per cent of developer service revenues.

The new incentive is aimed at stimulating companies to improve their performance to customers wanting new connections and would be paid on surveyed customer satisfaction “rather than quantifiable delivery performance”, according to FWC.

FWC managing coordinator, Martyn Speight, said: “We are adamant that the Ofwat proposals need to be beefed up and rewards only given where new guaranteed standard targets and associated compensation payments are met.

“This already occurs with electricity and gas connections where our members find that the behaviour changes necessary for open competition have happened.”

FWC has consistently maintained that across England and Wales, many water companies “have been slow to recognise that their approach towards self-lay does not facilitate open competition” and has lobbied for change.

According to the FWC, Ofwat appears to be “missing the opportunity D-MeX affords” to ensure that other initiatives which impact on services to developers, such as a fresh code covering adoption arrangements and a suite of new charging rules, get implemented in ways which ensure behavioural compliance against principles Ofwat sets.

Speight added: “To us it looks perverse that Ofwat is now solely considering developer satisfaction ratings and not using D-MeX to incentivise compliance against a range of other matters, such as those aimed at greater openness and transparency, which they look to have difficulty getting established.

“This is in marked contrast to the energy sector where the Ofgem incentive is designed to financially reward companies where their engagement genuinely leads to higher quality outcomes which are to the benefit of all stakeholders”.

In response, Water 2020 senior director, David Black, said: “Our Developer Services Measure of Experience (D-MeX) is one of a number of initiatives Ofwat is delivering – following engagement with stakeholders – to improve companies’ delivery of developer services.

“Our D-MeX proposals are currently out for consultation as part of our wider methodology for PR19 and we will be considering the views of Fair Water Connection alongside the others we receive ahead of the publication of our final methodology in December.”