Ofwat’s chief executive Rachel Fletcher has challenged incumbent companies operating wholly or mainly in England to do more to support the development of markets.

In an open letter published yesterday (28 May) Fletcher said the overall level of incumbent water company support for markets is “unacceptable”.

“We see numerous, persistent examples of incumbent water companies failing to support the development of effective markets – in particular the markets for business retail and developer services”, she added.

Fletcher said Ofwat expects to see a “significant improvement” over the coming months and that in some cases incumbent water companies are giving “insufficient thought” to the potential impact their actions (or inaction) can have on the effective functioning of markets for customers.

She further set out the areas of improvement the water regulator expects to see by autumn.

These include:

  • Effective engagement in and support for initiatives aimed at driving improvements to the business retail market
  • Supporting a vibrant competitive market for developer services
  • Effective support for the development of new markets

The letter says that if the regulator does not see a “significant improvement” by the autumn it will “increase the pace and extent of pressure” it exerts on incumbent water companies, considering the “full range of regulatory tools” it has at its disposal.

It adds: “This includes our Competition Act and sectoral enforcement powers where appropriate. For example in the business retail market we could propose changes to the governance process for code modifications if we think the current process is being hampered by companies prioritising vested interests over the effective functioning of the market.”

The regulator also outlined that there are formal and informal steps it can take to publicly highlight and reward good practice and likewise penalise poor performance.

Over the next few months Ofwat says it will monitor incumbent water companies and will review progress in the autumn, including whether particular companies are holding up progress overall. Companies have until the end of October to respond to the letter.

Last week MOSL published its market performance operating plan (MPOP) in which it provides the framework within which that accelerated improvement can be achieved.

Ofwat welcomed MOSL’s MPOP, including its focus on improving customer outcomes and trading party performance.

During the final quarter of 2018/2019, which ran from January to March, water watchdog the Consumer Council for Water (CCWater) said it saw an increase in complaints from non-household customers.

During that period CCWater received a total of 1,078 complaints, 95.4 per cent of which pertained to water retailers.

The vast majority of complaints, 72 per cent, were made about billing and charges. Administration was the second most frequent area of concern, with 12 per cent of the total.