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Ofwat should “focus its efforts” on the business retail market, new connections and developer connections according to priorities set out for the regulator by the Department for Environment, Food and Rural Affairs (Defra).
The strategic policy statement (SPS) to Ofwat urged the regulator to use competition in the non-household water market to stimulate long-term sustainable investment and benefits for billpayers. The SPS, which will inform the 2024 price review, was formally laid in parliament today (02 February) with protections for small business customers and measures to improve the rules, processes, and structures of the market.
It called on the regulator to think about whether changes to market rules, processes, and structures could boost market resilience and investor confidence as well as delivering better outcomes for customers and the environment.
The SPS suggested Ofwat should monitor and promote how water companies support the development of a well-functioning business retail market. It said the regulator should encourage retailers to support customers who fall behind on bills and proactively manage bad debt.
To buffer customers in the event of an unexpected retailer failure, the SPS instructed Ofwat to review the supplier of last resort arrangements and highlight any need to change regulatory barriers.
Billpayers who are less engaged with the market, who tend to be lower water consumers, should be protected, the statement said, and called on Ofwat to improve the value all customers get out the retail market by promoting better collaboration between market participants.
The statement also encouraged the continuation of work begun by wholesale and retail water companies, Ofwat and the Market Operator MOSL to resolve frictions and overcome structural challenges.
Within the new appointments and variations (NAVs) market, the SPS said Ofwat should explore customer protections including the range of customer services, complaints handling and available support for customers who struggle with their water bill.
The statement said the government expects water companies and the regulator to work with home builders to support more sustainable property development as the government increases the supply of new homes. It called for “fairness and transparency” in charging arrangements and for more collaboration between suppliers and new connection customers, particularly on large-scale developments.
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