MOSL, the non-household (NHH) retail water market operator in England, has told Ofwat “there are opportunities to set clearer targets and performance commitments for the NHH market” in the upcoming 2024 Price Review.
Commenting in response to Ofwat’s PR24 consultation, which closed on 22 July, MOSL said:
“During the last business planning period (PR19) the non-household (NHH) market was in the process of opening. At this time, wholesalers were not fully aware of the requirements for investment and performance incentives. As such, very little on the NHH market was included in water companies’ business plans.”
The market operator now believes there are opportunities within PR24 to set clearer targets and performance commitments for the NHH market, particularly in the areas of metering, water usage and customer service. MOSL would like to see an increased focus on market assets and market performance in PR24 business plans.
According to MOSL, the focus to date has been on reducing Per Capita Consumption (PCC) for domestic customers, but greater measures are also required to secure the reduction in demand for business customers and to improve the existing and aging NHH meter stock.
In MOSL’s view stronger incentives are required to support water companies’ performance specific to the NHH market – where focus and investment are currently low.
Any investment should be cost beneficial and MOSL would expect wholesalers to develop business cases for improvement with their relevant retailers.
“We would welcome Ofwat’s support in developing these targets through new or, where appropriate, existing frameworks,” the response says.
Retailers still can’t make an appropriate profit in many customer bands
In an accompanying letter to David Black, Ofwat’s interim Chief Executive, Sarah Mc Math CEO of MOSL writes:
“With more than four years’ experience of operating the market, we have learnt what works and what needs further improvement. Importantly, we also have a clearer view of the market frictions and have actively taken steps, working with wholesalers and retailers, to resolve them.
“However, evidence shows that even if the market is as efficient as it can be, this alone will not be enough for the market to flourish or deliver benefits to all customers. Whilst some NHH customers have undoubtedly benefited from market opening, retailers still can’t make an appropriate profit in many customer bands.”
“This isn’t just bad for retailers. It risks stifling innovation, investment, and the development of improved service offerings (including water efficiency), which is bad for customers and for the environment.”
Click here to download MOSL PR24 consultation response in full
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