The Yorkshire Forum for Water Customers has a key role in helping Ofwat, scrutinise our business plans. Likewise, after a rocky start, PR14 was delivered on time and in line with its stated objectives.
Ofwat has started the process of tackling the current market arrangements having recently announced a review of the credit terms offered by wholesalers due to report back by April. Ofwat will need to embrace innovation and an agile approach if it is to remain relevant in the ongoing debate about the future of the sector.
By way of example, the lack of any meaningful comparison tools for customers can be directly linked to retailers having to manage the complexity of dealing with hundreds of different wholesale tariffs, operational processes that vary from wholesaler to wholesaler and access to wholesale services such as meter reading that can be described, at best, as patchy.
Alongside switching rates, there has been continued commentary on the low margins available to retailers in the business retail market. We now have traditionally conservative and pro-business voices such as the Financial Times questioning the rationale for a privately owned water sector given the imbalance between customer outcomes and investor earnings since privatisation.
As part of the price review process, we must submit a business plan that is assessed by Ofwat. For the market opening process, decisions were originally taken in order to ensure it opened on time.
However, of more concern than switching levels should be the structure of the market itself. In any event, household competition would likely only be considered by Government if the business retail market has successfully delivered benefits for customers. Without them Ofwat could well find itself in position where Government believes it needs to step in to protect customers, whether through action on the business retail market or changes to the capital ownership model.
In such an environment it is unsurprising to me that customer engagement is being held back — retailers will continue to find it difficult to offer public facing comparison tools and existing intermediaries such as price comparison websites will be unwilling to engage in a meaningful way until such issues are resolved.
Relying on tweaks to existing approaches no longer appears to be enough. As part of its role, Ofwat produces process and policy documents which they ask water companies to comment on.
Outside the industry there continues to be disquiet about where economic regulation finds itself in terms of complexity. As a result, Ofwat finds itself between a rock and a hard place.
Ofwat has been attempting to grasp the nettle on these difficult issues. Renationalisation My last point on the business retail market brings me neatly to my final challenge: These are usually called consultations.
Ofwat was clear from the start that it would set margins at an appropriate level having taken into account benchmarks from similar retail markets.
But will that be enough? Retail competition for household customers may have delivered such a step change, but that further expanding competition looks like it has been taken off the table for now.Sembcorp Bournemouth Water’s Customer Engagement Planning Forum Report to Ofwat on Sembcorp Bournemouth Water’s Business Plan 28 November Ofwat methodology consultation August and how much its business plan reflects this (ie the role described in its ‘Customer report on how they assess performance commitment levels, and to describe the areas of challenge and disagreement, and how the companies responded.
Ofwat has written to the Department for Communities and Local Government (DCLG) in response to its current consultation on planning for a sustainable. OFWAT Consultation: Setting price controls for Business Planning expectations ‘A consultation’. Thank you for the opportunity to comment on the latest consultation on the approach to.
Our next business plan () Build your own report. PR19 business plan: Not Just Water.
Working with our regulator – consultation responses. You can see our response to Ofwat’s PR19 draft methodology consultation in the documents below: Methodology response.
The Water Report - What Ofwat's new CEO needs to address, 16 February PA IN THE MEDIA What Ofwat’s new CEO needs to address By: Richard Khaldi, PA water sector there has been continued commentary on the low margins available to retailers in the business retail market.
Ofwat was clear from the start that it would set margins .Download