Water retailer Business Stream has confirmed to Utility Week that it will not be putting itself forward to take on the customers of failed Aquaflow Utilities.

Last month, just ahead of the second anniversary of the opening of the non-domestic water market (1 April) news emerged that Aquaflow was expected to enter liquidation and become the first player to exit the market.

Ofwat said it would step in to protect around 74 business customers as it revealed Aquaflow anticipated entering liquidation as of midnight on 9 April.

The regulator will use its powers under the interim supply code which is “broadly equivalent” to the supplier of last resort process in the energy retail market.

Business Stream told Utility Week that its “key priority” is to ensure the smooth transition of the non-domestic customers it is in the process of purchasing from Kelda Group.

The deal, the value of which has not been revealed, is expected to take effect this summer, subject to regulatory approvals.

It will see Business Stream manage water and wastewater services for around 140,000 new customers in the Yorkshire area from Yorkshire Water Business Services (YWBS) and Three Sixty – both companies are part of Kelda.

Ofwat has also told Utility Week it has decided to commence the “interim supply offers process”.

Its interim supply code, published in March 2017 ahead of market opening, comes into effect when a licensee exits the market and its customers need to be reallocated to another supplier.

Jo Dow, chief executive of Business Stream, said: “We announced our most recent acquisition of Yorkshire Water Business Services and Three-Sixty at the start of this year, doubling our market share and positioning us as one of the top three retailers in the UK water market.

“This deal is hugely significant for Business Stream and our key priority at this time is in ensuring a smooth transition for our newly acquired and existing customers.”

A spokesperson for Ofwat said: “We are currently waiting for offers from eligible licensees and these will be reviewed in accordance with the interim supply code. Customers will be allocated to a new retailer as soon as possible.”

Ofwat is working with market operator MOSL to “progress the interim supply process”.

MOSL suggested the failure of a retailer is expected in a “maturing competitive market” and said expects to see retailers “both enter and exit the market” as it continues to mature.

Aquaflow was granted its supplier licence on 4 January 2018.