Ofwat has launched a consultation on the next steps necessary to protect customers in the non-domestic water market as well as shielding retailers and wholesalers.
From today (17 April) the regulator will assess the route forward to find an enduring solution following the emergency short-term measures that were implemented in March and earlier this month.
Ofwat said it would examine a potential code modification to provide liquidity for retailers for a “further defined period of time”.
The question of bad debt was raised with the anticipation of customers being forced to liquidate their businesses because of the coronavirus and economic downturn. Ofwat’s consultation will explore options to cap bad debt exposure for both retailers and wholesalers.
Both MOSL and Ofwat had said the initial code changes were short-term measures that would need to be adapted as the situation changes.
Some in the sector called for greater clarity around the measures, which were called “ambiguous” by one retailer.
Working closely with MOSL, Ofwat stopped retailers from chasing unpaid bills or disconnecting customers whose premises have been forced to shut because of coronavirus. However, water retailers would still be required to pay wholesalers for consumption or assumed bills.
Another change was to allow properties to be marked as vacant, but questions were raised about those that were vacated before the ruling was made.
Proprietors of sites that closed upon government advice might not not have received notification from Ofwat or their retailer to provide evidence of being vacant.
One retailer said the changes, while very welcome and necessary, did not go far enough to reflect the reality for many businesses, especially smaller companies that may not have an online presence to host the proof of closure.
Jacob Tompkins, co-founder The Water Retail Company, told Utility Week the updates to codes add confusion for customers and conversations should have started a lot sooner than they did.
“We began negotiating with customers way before we hear anything from Ofwat,” Tompkins said. “When the virus was still in China we anticipated this might have been an issue and started talking to our customers then. It’s a shame we didn’t hear previous discussions from Ofwat and MOSL. There should have been discussions about this much earlier.”
He also acknowledged the benefits the changes will have for some customers and companies as well as the hard work Ofwat and MOSL are undertaking to support the market.
The regulator and market operator will continue to review the measures to support the market at an unprecedented time.