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Business water retailers will be given leeway on settlement deferrals and can list customers’ premises as vacant if they are temporarily closed due to coronavirus, under new rules.
The changes have been pushed through by Ofwat and MOSL to support retailers and wholesalers and manage cash flow to protect the retail market as it nears its third anniversary.
The first measure will prevent any inappropriate bills being produced. The system used to generate bills will create an estimated read based on prior data in circumstances where an accurate meter reading is not available. The code will mean retailers do not have to pay wholesalers based on estimated consumption that is vastly different to actual usage.
It will ensure any settlement estimations are more accurate and customers will not be charged for water that they are not using during the pandemic.
When businesses re-open they will need a meter reading to ensure future bills are calculated accurately.
The second change in effect from today (30 March) will permit deferral of payments between wholesalers and retailers to share the financial burden while customers are unable to pay bills.
The settlement deferral is part of an ongoing, more complex change to protect retailers from becoming defaulting parties and not paying settlement charges. There will be a 50 per cent leeway applied to settlement charges to manage the cash flow in the short term.
This acknowledges that customers may not be making payments to retailers. Utility Week understands this support will not be an enduring solution and Ofwat is expected to make further assurances to wholesalers about the longer-term implications. However, the supportive measure will be applicable for three months to the end of June.
MOSL worked closely with Ofwat and Defra to assess what changes would benefit the market and update codes accordingly. In response to correspondence from retailers and wholesalers asking for certain code changes to be urgently considered, a group was formed by MOSL comprising senior members of Ofwat, Defra, Water UK and the UK Water Retail Council.
The code changes were discussed at a panel meeting on Friday when the updates were approved as part of a package of measures to bolster the retail market.
Code changes made earlier this month included waiving performance charges for three months from March to May. Retailers and wholesalers will not be subject to charges if they miss performance standards but must continue reporting on them.
Another alteration was to postpone an innovation fund, which was financed using money collected in 2019 for performance charges with the intention companies could bid on the funds for various projects. That money will instead be redistributed to support trading parties.
Ofwat and MOSL will continue to work closely with stakeholders to develop a strategy for the ever-changing liquidity issues the sector is facing because of the pandemic.
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