The plans, out for consultation, would enshrine the market preparations in the company’s licences, with three broad duties.
These are: a general obligation to carry out any required activities to ensure the smooth and timely expansion of the competitive retail market; a more specific obligation to carry out the set of activities defined in a formal transition plan; and to provide more information around areas of specific concern if necessary.
This proposal comes after Wessex Water boss Colin Skellett told Utility Week at the start of this month a more “formal” assurance process was required to monitor company progress ahead of market opening.
The Water Industry Commission for Scotland chief executive Alan Sutherland, also told Utility Week that “readiness tests” should be introduced.
In its consultation, Ofwat is also proposing to end in-area trading bans for water companies in order to “create a level playing field that will encourage rivalry between retail suppliers”.
This would create “effective competition” by allowing incumbent retailers to challenge for commercial contracts in their own regions and challenge for contracts across multiple sites.
Alongside this reform, Ofwat is looking to allow self-supply licences to be granted, similar to those that exist in the Scottish market. This would allow customers to become their own water retailer for itself and associated entities.
The regulator also said it will require current licence holders to reapply for a retail water and wastewater licence, via a “simplified application process”.
Ofwat stated that while the simplified process “would still require a small degree of effort on the part of the current licence holder” the opportunity to compete for 1.25 million customers “should justify the effort”.
The new licence would allow holders to operate in the joint Anglo-Scottish market.
The consultation closes on Monday 20 July.