Water sector regulator Ofwat has stepped up its pressure on Tor Water to deliver on its obligations as a retail water and sewerage provider.

Despite a string of requests for information by Ofwat and calls to put its house in order, Tor Water has repeatedly failed to provide the information required or any assurances that it is addressing the issues.

Ofwat appears to have been triggered into taking further action since learning Tor has defaulted on a second contract. The regulator has now launched a consultation on its proposal to issue a Final Enforcement Order to Tor Water. If the Devon-based retailer still fails to comply with the proposed Order, it faces the very real prospect of losing its licences and possible legal action.

Ofwat granted Tor Water a Water Supply Licence with a retail authorisation and a Sewerage Licence with a retail authorisation on 29 June 2018.

Between October 2018 and the issue of a Direction on 29 May 2019 Ofwat received eleven notifications from a contracting wholesaler that Tor Water had become a Defaulting Trading Party under the Code as a result of failing to pay the wholesaler.

The Direction required Tor Water to:

Pay any outstanding, and undisputed, invoices or statements by no later than 28 June 2019;

• Pay any future undisputed invoices and statements to any relevant Contracting Wholesaler
• Not provide water retail services and/or sewerage retail services to any eligible premises that it does not already provide these services to while it remains a Defaulting Trading Party
• Not seek to register any new eligible premises under the Code;
• Notify MOSL that it is subject to the prohibitions;
• By Friday 31 May or a later date agreed with Ofwat, include a notification in a prominent position on the homepage of its website, in terms approved by Ofwat, stating that it is not currently providing the services to any new eligible premises and/or nonhousehold customers.

Ofwat stipulated it must be clear in any communications as to the reasons why it is not currently providing services to additional eligible premises and/or non-household customers.

The consultation paper goes on to list a catalogue of failures by Tor Water to comply with Ofwat’s requests for information and calls for it to pay outstanding bills.

According to the consultation document, to date Tor Water has still not complied with the Direction or dealt with the issues relating to its compliance. It has also failed to respond to a further information request by Ofwat issued on 3 July for response by 10 July.

Tor Water has however paid the invoices for which it had been classed as a Defaulting Trading Party when the Direction was issued on 29 May.

Tor Water since failed to pay wholesale charges to three contracting wholesalers

Since the payment made on 28 May 2019, Tor Water has failed subsequently to pay wholesale charges to three contracting wholesalers. Ofwat was notified on 9 July 2019 that Tor Water had become a Defaulting Trading Party under one wholesale contract. As a result, it has also become a Defaulting Trading Party under its other wholesale contracts.

In addition, Ofwat also received a notification from a second contracting wholesaler on 11 July 2019 that Tor Water had become a defaulting trading party under its wholesale contract. The wholesaler has also issued a notice of intention to terminate its contract with Tor Water.

Two contracting wholesalers have separately notified Ofwat at various times that Tor Water has become a defaulting trading party under their wholesale contracts. The regulator has received fifteen such notifications in total. In two instances this has led one contracting wholesaler to issue two separate notices of an intention to terminate a wholesale contract. The most recent of these, issued by South West Water on 12 July 2019, remains in place.

Informal regulatory action was initially pursued through engagement with Tor Water, followed by the issue of a direction to secure compliance with the Code. However, “Tor Water has continued to be in breach of its obligations, resulting in the further escalation of our intervention and the decision to take enforcement action”, Ofwat said.

All licensees are required provide Ofwat with an Annual Certificate by 1st April each year and any additional certificate of adequacy requested by Ofwat.

Tor Water has yet to post notification on its website that it is not currently providing water retail services and/or sewerage retail services to any new eligible premises and/or non-household customers that it does not already provide services to. The retailer has also failed to notify MOSL that it is subject to the prohibitions in relation to acquiring new customers.

"Tor Water has .. provided inconsistent and incomplete information"

Tor Water also failed to submit its Annual Certificate by 1 April 2019 – a certificate of adequacy – whereby all retail licensees certify they have, and will have for the following 12 months, all necessary arrangements in place, including management, financial, technical, operational and other resources.

In February 2019, Ofwat issued a request for an Additional Certificate and supporting verification report by 20 February 2019 - Tor Water did not comply with the deadline. Despite a number of subsequent reminders, “Tor Water has subsequently provided inconsistent and incomplete information in response to this formal request,” Ofwat said.

Despite a reminder by Ofwat on 3 July 2019, the certificate remains outstanding and the regulator has not been notified of reasons why Tor is unable to provide such a certificate.

On 3 July 2019, alongside the reminder to Tor Water of its obligations to provide the Annual Certificate, Ofwat also requested a supporting verification report to it to be submitted to it by 10 July 2019 which remains outstanding.

According to the consultation papers, the circumstances “call into question Tor Water’s ability to finance its statutory duties.” In the light of this, Ofwat now expects Tor Water either to provide robust rebuttal evidence and a firm plan to return to compliance, or to provide details of the circumstances calling into question the adequacy of its resources. “Tor Water has provided no such comfort and made no such notification”, Ofwat said.

Under the proposed Final Enforcement Order Tor Water will be required to:

• Provide the outstanding Annual Certificate or notification of why it cannot provide such a certificate
• Provide the supporting outstanding verification report required and the outstanding information requested by Ofwat
• Cease to be a Defaulting Trading Party, bringing itself into and continuing in compliance
• Notify MOSL of the restrictions that apply to it under the Direction
• Post the notification required by the Direction on its website

Latest information filed at Companies House about Tor Water show a change of details for persons with significant control on 2^nd July and 19^th July, while a registration of charge in favour of Apollo Business Finance Ltd was filed on 2^nd July.

This morning the retailer's website appears to be down.

Deadline to make representations or objections on the draft Order is 9am on Monday 19 August 2019. A failure to comply with the Order may result in the revocation of Tor Water’s retail licences.

Click here to access the consultation document.