Five water retailers have refunded thousands of customers who were overcharged.
In total, the five retailers have refunded £380,000 to 3,500 customers after a CCW investigation uncovered billing errors.
The retailers in question include Business Stream, Everflow, SES Business Water, Water Plus and Wave.
All of them had inadvertently overcharged customers after misinterpreting a change to Ofwat’s retail exit code made in 2020.
Christina Blackwell, head of business customers at CCW, said: “While we accept that this was a genuine mistake by these five water retailers, it’s certainly not the customers’ fault. The economic climate is really challenging for many smaller businesses at the moment and they cannot afford to be overcharged.
“CCW was disappointed to find that some retailers were very slow to act and were not completely transparent about the number of customers who had been affected. We would have expected these retailers to act swiftly to do the right thing without CCW having to intervene.”
The mistake in interpreting the code came when changes were made to the price cap protections for businesses who have not switched retailer, or agreed another contract with their existing supplier. This should have been applied as a maximum charge per customer – rather than as an average – from April 2020.
The CCW said that this incorrect application of these charges by five of the 16 water retailers who supply water to businesses in England resulted in some businesses paying more than they should for their water over a three-year period that lasted until March 2023.
Some customers did end up undercharged due to the misinterpretation. But CCW is clear that this was not those businesses’ fault, so retailers should not seek to claw that money back.
In response, Lois Gill, head of regulatory affairs at Everflow said that the CCW’s viewpoint “significantly misrepresents what happened”
She added: “We serve a small number of customers on default pricing, but in the case of the few that we do, we applied the old rules on default pricing in the way that we did because it was fairer.”
“Instead of charging customers hugely varying amounts depending on their wholesale supply region, we used averages to charge customers in a consistent way no matter where they operate. This actually led to us losing more money than we gained. The new rules around default pricing have recognised and addressed this fairness issue.”
Business Steam chief executive Jo Dow added: “In April 2020, the Water Services Regulation Authority (Ofwat) made a change to the way water and waste water charges were calculated in England. While Ofwat anticipated that this change would be implemented from 2020, the proposed change wasn’t highlighted to water retailers in advance and, as a result a number of retailers, including ourselves, were unaware of this new requirement.
“Ofwat has publicly acknowledged that this was not a deliberate failure to comply on our part and that we made no commercial gain from this, with the vast majority of our customers actually being under-charged. Only a very small number of Business Stream customers were over-charged, with the average annual overcharge being less than £25. For those customers affected, we wrote to them to confirm that we’d applied a credit to their account to rectify this issue.”
A spokesperson for Water Plus said: “Water Plus is charging in line with the market requirements and pricing is published for all our customers to see each year. As the regulator Ofwat has also stated, Water Plus has not financially benefited from the application of charges set out under the Retail Exit Code (REC) pricing mechanisms – and no further steps for charges applied for previous years are required.”
Earlier this year, Ofwat ruled that the water retail market is still “not functioning as effectively as it needs to”.
The water regulator ruled that market frictions including poor quality data and wholesaler underperformance are impeding the retail sector, in its annual ‘state of the market’ assessment.
Since the opening of the business retail water market in April 2017, around 1.2 million business customers in England and eligible business customers in Wales have been able to choose their supplier of water and wastewater services.