Ofwat rules out 2021 implementation of CMA changes

Changes made by the Competition and Markets Authority (CMA) will not be reflected in 2021 charges, Ofwat has ruled.

Anglian, Bristol, Northumbrian and Yorkshire must wait to April 2022 to introduce updated charges over the remaining three years of AMP7.

In December Anglian, Bristol and Northumbrian asked Ofwat to change its charging rules to let the appellant companies put the CMA’s redetermination in place from April 2021.

This would mean they benefit from four years of the updated price control; however, they could not publish charges until after Ofwat’s deadline.

The water regulator assessed the benefits to customers and stakeholders as well as the logistics of altering billing and IT systems and found implementing charges over three years represented the best option in the circumstances.

It called implementing the CMA redetermination over four years “increasingly impractical” due to the tight timeframe and retailers requirement of charges before the CMA is due to publish its redetermination.

David Black, chief regulation officer, said revising the charging rules to allow for the possibility of introducing the new charges from 2021 was not in the best interest of customers.

Ofwat noted the limited time available with the CMA set to publish its determinations in mid-February leaving insufficient time for companies to publish their charges for the upcoming period.

The CMA said it was not envisaging a date in the first third of the month and it is hesitant to commit to a specific week because “numerous factors” meant it was more likely to push back on the publication date rather than being ready ahead of it.

Water retailers need to know the charges so they in turn can set their own business retail charges for the coming year. Changing the charging rules to allow the appellants to delay publishing their charges would have a knock-on effect for retailers, which are already operating under strained conditions.