The consumer watchdog for the water sector (CCW) has called for the non-household market to be simplified to increase competition.
In particular, the CCW has called for a national licencing regime for new appointments and variations (NAV) companies.
It claims that streamlining how Ofwat grants licences for NAVs via a nationwide licencing system could lower costs and shorten the administrative steps.
NAVs connect new build housing and non-domestic developments to existing water and sewerage networks. They own and operate the newly laid connections.
At present, NAVs must apply for a licence from Ofwat regardless of size or geography of a new connection. For well-established companies this results in repeated applications to extend coverage in a region they already work in.
As part of a Department for business and trade (DBT) review of how the water sector is regulated, CCW said the new appointment should benefit the end customer either by financial incentives or improved service levels. This would require all NAVs to commit to match or exceed the level of service of each wholesalers in the areas it wishes to operate in.
CCW said that some NAVs have committed to match incumbent suppliers’ level of help but without a formal requirement to do so, it could disadvantage vulnerable customers.
The watchdog has been vocal in its support for a single social tariff that could offer the same support to householders regardless of where in the country they live. This system, CCW added, would make it less onerous for NAVs to standardise the support they offer across different regimes.
The current licencing process has been criticised for being overly repetitive, adding time-consuming obligations and associated costs to NAV companies, which could put off new market entrants.
Streamlining the process, CCW said, would lighten the associated workload for Ofwat, which has grown as the NAV market has become more established since 2017 when the non-domestic market opened to competition.
The current NAV framework brought competition to how regional water and wastewater services are provided by allowing new entrants to replace the incumbent wholesale provider. This however does not extend choice of supplier to the consumer.
The consultation ran to 17 January on this issue as well as proposals to bring the price control appeal process for water in line with energy and the suggestion of a wider review of regulators’ duties.
CCW told DBT there was “little scope for further competition” elsewhere in the non-household retail part of the water sector, because margins remain too low for price differentiation that might tempt customers to shift supplier.