Standard content for Members only
To continue reading this article, please login to your Utility Week account, Start 14 day trial or Become a member.
If your organisation already has a corporate membership and you haven’t activated it simply follow the register link below. Check here.
Ofwat has said it wants to completely deregulate the business retail market so it can stop setting prices, once competition is able to keep costs down.
The regulator sets the price, investment and service package that customers receive, which includes setting limits on the prices the water companies can charge their customers.
Speaking at a press briefing in London, Ofwat chief executive Cathryn Ross said her hope was to be able to deregulate the non-household market so the regulator no longer has to set prices, once competition becomes sufficiently effective to constrain them at a “reasonable level”.
“Of course what that doesn’t mean is that the market would ever be completely deregulated – there would remain regulation around things like customer protection, the provision of information to customers, and also we would retain the ability to regulate the interface between the retailers and wholesalers,” she said.
“When I talk about deregulation, it’s really getting rid of those price controls, rather than deregulating the market completely. But we’re a long way away even from that.”
The market is due to open in April 2017, allowing 1.2 million businesses and other non-household customers of providers based mainly or wholly in England to choose their supplier of water and wastewater services.
Ofwat said experience in other sectors suggests that in the transition to full competition there may be a need for continuing regulatory protections – “to shield customers from potential abuse associated with remaining pockets of substantial market power and to provide confidence that the new market arrangements will not unnecessarily disadvantage groups of customers”.
Under PR14, Ofwat set separate binding wholesale and retail price controls for the 2015-20 period – with up to four price controls covering wholesale water, wholesale wastewater, household retail and non-household retail business activities.
Last month, following a thorough review, the regulator announced it would set a three-year price control for non-household retail activities from 2017, after the proposal received “strong support” from water companies.
This, it said, would allow it to monitor how competition is developing in the non-household retail market, and “deal with any further cost allocation issues” that might emerge between retail and wholesale and/or non-household and household retail.
Please login or Register to leave a comment.