Ofwat tackles competition for new appointments and variations

Regulator identifies barriers facing NAVs

The market for new appointments and variations (NAVs) is not reaching its full potential to “deliver significant benefits”, according to a new study published by Ofwat today (10 October).

It has identified a number of “potential barriers” faced by NAVs looking to participate in the market, including issues relating to the process of creating a new appointment; the behavioural practices of incumbents and pricing.

The study, which drew on existing published information and engagement with stakeholders, found the market “may have some way to go” before it delivers real benefits for developers, end-customers and society.

Ofwat suggests the NAV market has the potential to enable sites to be served at a lower cost, facilitate multi-utility developer services and encourage innovation in the way water services are provided, but it is not currently working as effectively as it could.

The regulator said it commissioned the study to investigate how the market is working and to consider the extent to which any factors currently “act to prevent, restrict, or distort” the market from achieving its full potential.

Based on the study’s findings, Ofwat has outlined actions to address the concerns raised. These include:

  • Reviewing policies and processes to minimise regulatory and administrative barriers
  • Consulting on changes to rules on new connection charging and on updating guidance on bulk supply charging, and
  • Challenging the water sector to improve access to information and the delivery of services to NAVs.

Ofwat said it will also be considering how to raise awareness of NAVs among developers and other regulators involved in the application process.

The NAV regime applies in England and Wales and has been in place since the 1990s. It enables a company to apply to Ofwat to replace the incumbent as the monopoly provider of water and/or wastewater services for a specific site.

Typically, a NAV takes wholesale water and wastewater services up to the boundary of its site from the incumbent in whose area it sits. 

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