Ofwat has once again reaffirmed its desire to improve performance and service in the commercial water market.
A new report published by Ofwat states that performance and service levels provided by wholesalers within the business retail water market need to improve if the market is to reach its full potential.
Ofwat’s Open for Business report was published in early 2018, followed by a Call for Inputs (CFI) in November 2018. Ofwat claimed that wholesalers hold ‘a monopoly over the delivery of wholesale water and sewerage services’ and play a fundamental role within the market.
Concerns have once again been raised that the market is not functioning as effectively as it should. Ofwat also stated that it wants to avoid “a divergence of basic service standards provided by wholesalers between domestic and business customers.”
In November, the CFI identified the following key issues:
- A wide variance in policy approaches that has caused problems and impacted retail prices.
- Inadequate metrics to measure wholesaler performance and service.
- A lack of incentives to encourage wholesalers to improve their public reputation.
- Weak financial penalties to punish under-performance.
Evidence collected from the CFI was revealed in an outputs report which outlines Ofwat’s expectations and suggested improvements for the wholesale market.
The report states: “Addressing these market frictions should lead to a better functioning market and deliver improved outcomes for customers.”
However, the regulator claims that progress has been made since the CFI: “For example, the Market Operator (MOSL) has stepped up its scrutiny of trading party performance and is shining a light on good and bad performance, both of which will sharpen incentives on trading parties.”
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