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Ofwat has announced changes to the market retail water codes to introduce penalties and incentives to boost accuracy of meter readings.
The changes are designed to deter companies submitting an estimate in a situation where a meter is difficult to locate or to access. Companies with greater numbers of difficult to locate or difficult to read meters would be most impacted by the changes.
From April, retailers will be incentivised to obtain meter reads within 160 business days and face a penalty of £20 if that is missed. The charges will be capped each month at 0.15 per cent of the primary charges payable to wholesalers, with the cap increasing to 0.25 per cent from October.
The current market performance framework charges – but does not penalise – parties for late or non-submission of meter reads.
Poor quality market data has been identified as a friction point within the market, something Ofwat believes incentivising actual not estimated meter reads will improve.
Jacob Tompkins, founder of the Water Retail Company told Utility Week there are “massive issues” with low quality data and the difficulty of reading meters, which was a legacy from market opening.
Despite a push to locate and read the meters many remain unread, which is something Ofwat is working to address with the code changes.
In some cases, the cost of reading a meter can be greater than the current fines imposed by Ofwat, which has resulted in retailers simply submitting estimated readings – thus exacerbating the poor-quality data in the sector.
Ofwat said customers will benefit from retailers and suppliers being incentivised to improve their performance and to increase the quality and timeliness of data submissions including meter readings.
Tompkins said the large number of issues in the water retail market would be better addressed via a fundamental review instead of numerous code changes.
“Ofwat has done very well to open the world’s largest water market but there are lots of issues that retailers and wholesalers would like to see addressed in the round instead of individual changes.”
The regulator said it wants to see companies incentivised into better performance to avoid the charges and said increasing the cap should not lead to higher charges if parties improve their performance accordingly.
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