Ofwat has called on water companies to play a more active role in supporting competitive markets in the water sector, including the business retail and the developer services markets, to deliver improved outcomes for customers, society and the environment.
The call comes as the regulator publishes its review of incumbent company support for effective markets , together with an open letter from Chief Executive Rachel Fletcher to each water company in England, highlighting examples of good practice but also areas where each company needs to improve.
In September 2019, Ofwat wrote to the water companies to ask for their views and evidence as part of its review of incumbent company support for effective markets. It also sought input from retailers in the business retail market, self-supply licensees and new appointees.
According to the regulator, too few companies embrace markets and the role they can play in helping them address the strategic issues they are facing. The report says companies need greater commitment at senior or board level to support the markets and to do so in a way that goes beyond compliance.
It also finds that while collaboration can support markets and so benefit customers, too many water companies are incorrectly using competition law as a reason not to collaborate or not to be more responsive to the needs and specific circumstances of individual market participants.
There are real differences between companies and within companies in their approach to supporting markets, with some companies performing much better than others.
Too few companies embrace markets and the role they can play in helping them address the strategic issues they are facing. Incumbent companies need greater commitment at senior or board level to effect change, so that supporting markets goes beyond compliance to behaviour and culture, the report concludes.
Emma Kelso, Senior Director of Markets and Enforcement at Ofwat said:
“Markets that work well can deliver a wealth of benefits for customers, society and the environment. They drive innovation, improve performance, provide greater choice and quality of service as well as lower prices. Water companies have a fundamental role to play and by providing high quality services to markets and we want to see a positive culture change in companies to support them”.
Today Ofwat has written open letters to the water company CEOs urging them to support the behaviours needed to make markets work and to ensure they deliver high quality services to these markets, including by ensuring adequate resources are provided to these parts of their business”.
The main report sets out a number of next steps - Ofwat will use the information gathered during this project to explore ways of making company support for markets more visible going forward.
Transforming water companies’ performance is a key strategic aim for Ofwat – the regulator sees support for markets as an important component of overall water company performance. As a result Ofwat is exploring ways of making company support for markets increasingly visible.
Click here to read the report in full
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