Ofwat has decided to continue allowing water retailers to defer a portion of their wholesale charges until the end of October, whilst rolling back other measures introduced to support them through the coronavirus lockdown.
In response to the pandemic, Ofwat worked with the market operator MOSL to introduce a series of temporary measures that would assist the non-domestic water sector while many businesses were closed down due to social distancing guidelines.
Following a consultation period, the regulator has begun unwinding these measures.
Ofwat said: “Our focus has been – and continues to be – to protect the interests of business customers affected by Covid-19, including by avoiding systemic retailer failure and ensuring our interventions do not come at the expense of the financial viability of the wholesalers.
“To be clear, protecting customers does not equate to preventing individual retailers from exiting the market, as supplier exit is a feature of any functioning market. Nor does it mean absolving business customers of their requirement to pay for services they have knowingly and legitimately consumed in the operation of their business.
“But it does mean providing business customers with appropriate and targeted relief, for example, by providing customers with additional time to pay their bills and making sure they are not charged for services they have not consumed and are not liable for.”
The deferral of charges will be extended to the end of October to give retailers more time to arrange alternative financing. Ofwat said this does not change the previous decision that all deferred charges should be paid in full by the end of March 2021 or run the risk of the retailer becoming a defaulting trading party.
Temporary vacancy flags were introduced to let retailers list a customer’s premises as vacant to avoid bills being generated while businesses were closed during lockdown. The regulator said that, because more time has passed, retailers now have had an opportunity to engage with billpayers in lockdown and can anticipate what a regional lockdown would mean for customers.
Retailers have until the end of September to remove the vacancy flags from CMOS and should seek to obtain meter reads that reflect actual consumption if a customer remains shut or is forced to close again.
There will be a financial incentive from October to remove flags for each supply point. Wholesalers will be incentivised to work constructively with retailers to improve accuracy of data in CMOS.
Arrangements for ongoing credit support requirements were not included but will be decided upon on 3 August.
The invoicing and payment of market performance charges, which were suspended because many of the charges could be materially affected by business closures and social distancing, were due to resume from August. These will remain suspended until the end of October.