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Thames Water has announced it will continue to show its “backing” for the non-household water retail market by offering “new and improved” commercial terms.
The water company said it will “further” support retailers and their customers by waiving collateral cover on the first £1 million of wholesale turnover for retailers across its region.
Mark Holloway, head of wholesale market services at Thames Water, said: “This move demonstrates our commitment to be open for business and willing to listen and support those retailers operating in our region.
“By taking this step, we’re promoting market entry, in particular for smaller retailers. The feedback we’ve received has been positive and we hope our current and future retailers see this as part of our continued commitment to them.”
The initiative has been welcomed by The Water Retail Company, as it believes the move could “help solve the major barrier to entry” for new retailers, particularly smaller retailers.
It said the water retail market was designed to “usher in an era” of competition but argued the number of new entrants has been “disappointing” and the market is at risk of being seen a “failure”.
The company said credit terms are “extremely onerous” for companies without a trading history, but Thames Water is offering a “simple solution” for new retailers.
It explained retailers are currently “forced to either pre-pay or to post a cash deposit of 50 days, and with “tight margins” it can become “unprofitable” for new entrants.
In a statement the company said: “Thames is making available to all retailers a discount on the credit terms meaning retailers do not have to provide credit support for the first £1 million of customer income.
“These discounted credit terms are open to all retailers and will mean that new entrants are able to trade and expand enabling them to grow to the point where they can secure other forms of credit.”
Rupert Redesdale, chief executive of The Water Retail Company, said: “Thames has understood the problem that new retailers face – the credit support options are a major barrier to entry and the ability to win new business. Thames’ innovative solution will boost the market and means that there will be a lot more competition which will be good for water customers.”
The Water Retail Company said it hopes other water companies will follow suit.
Thames Water took the decision to exit the business retail market ahead of its opening on 1 April 2017. The company said its decision would allow it to “concentrate on its core regional household business”.
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