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Ofwat has proposed a series of changes relating to liquidity, deferred charges and vacancies to move the non-domestic water market away from the temporary measures imposed in reaction to the coronavirus.
Together with the market operator MOSL, the regulator introduced a series of temporary market code changes to protect business customers and add relaxations for the retail market that did not come at the expense of wholesalers.
On liquidity, Ofwat is consulting on its two “preferred options”- not to extend support beyond the end of this month or to cap the maximum amount of total wholesale charges that can be deferred at no more than 40 per cent.
The measures were introduced for three months from March, but extended until the end of July as lockdown continued.
Georgina Mills, business retail market director at Ofwat, said: “We have been clear that sector-specific liquidity support was time limited and gave retailers time to establish what other support – including government support – they could gain access to. As businesses start to re-open and adapt to a new normal, we too must review our interventions in the longer-term interests of customers and the market, and welcome comments and feedback on how we can continue to protect business customers in response to the effects of Covid-19.”
Ofwat said deferred wholesale charges should be repaid in full by the end of March next year, with retailers and wholesalers invited to agree upon their own repayment profiles. Ofwat said in lieu of an agreement, 33 per cent of deferred charges should be repaid by the end of November and 66 per cent by end January 2021.
Retailers will be able to use the temporary flag vacancies until the end of July and these flags must removed from the central market operating system (CMOS) by the end of September.
The temporary suspension of invoicing and payment of market performance charges will be lifted so that they come into effect either at the end of September or October 2020.
Finally, Ofwat said credit support requirements would be maintained until all temporary vacancy flags are removed from CMOS, and beyond that date should be calculated based on primary charges that are due.
It stressed that there would be no further consultations on retailer bad debt and the Consumer Protection Code of Practice.
The closing date for the consultation is 16 July and Ofwat has promised to respond before the end of this month.
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