Ofwat is today proposing a small and temporary increase to the price caps in the business retail market - the temporary increase is intended to allow retailers to share some of the unexpected costs associated with bad debt that have arisen following the Covid-19 pandemic.
The proposals are in respect of retailers of water and wastewater services who serve business customers; they do not affect household customers. The amendment would temporarily increase – over the next two years - the maximum prices that retailers are allowed to charge business customers who are on default tariffs by 0.31%. For illustrative purposes, a small customer (0-9 employees or <0.5Ml per year) with an average annual bill of £500 could be paying up to £1.55 more.
The regulator has today published a consultation document seeking views on its proposal to temporarily amend the Retail Exit Code (REC) with effect from April 2022.
The small and temporary amendment would increase the maximum prices that Retailers are allowed to charge business customers who are on default tariffs. The temporary increase is intended to allow Retailers to share some of the unexpected costs associated with bad debt that have arisen due to the Covid-19 pandemic. We are making market-wide adjustments to the business retail (REC) price caps to maintain strong incentives on Retailers to manage bad debt costs so that only efficiently incurred excess bad debt costs are shared with business customers.
National measures introduced since March 2020 to contain the spread of Covid-19 have led to retailers facing unexpectedly high levels of business customer bad debt costs, as businesses have been impacted by the pandemic. Retailers are prevented from sharing unexpected cost increases with some business customers due to the price caps.
In April 2020 Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of industry revenue, which it considered was the level of bad debt an efficient and prudent retailer should have planned for.
Following consultation, in July 2021 Ofwat agreed to allow a small and temporary uplift to the business retail price caps.
Georgina Mills, Business Retail Market Director at Ofwat said:
"During the pandemic, we have implemented measures to continue to protect the interests of business customers.
"This small and temporary upward adjustment to the business retail price caps aims to protect customers in the longer-term by promoting stability of the business retail market, whilst maintaining strong incentives on retailers to keep bad debt costs as low as possible".
Deadline to submit views and evidence to Ofwat from all interested stakeholders is 5pm Wednesday 12th January 2022. A decision on the amendments will be published in February 2022 with adjustments taking effect from April 2022.
Click here to download the consultation paper Business retail market: Customer bad debt - Consultation on adjustment to REC price caps from April 2022
https://www.ofwat.gov.uk/wp-content/uploads/2021/12/Business-retail-market-Customer-bad-debt-Consultation-on-adjustment-to-REC-price-caps-from-April-2022.pdf
“SAS (Surplus Activated Sludge) is a bit weird and 
Owen Mace has taken over as Director of the British Plastics Federation (BPF) Plastic Pipes Group on the retirement of Caroline Ayres. He was previously Standards and Technical Manager for the group.
PureTec Separations, the Ledbury-based water treatment engineering firm, has appointed Dan Norman as its new Sales Manager – Water Process Systems, supporting the company’s continued growth in the UK and international markets.
bNovate has launched BactoCloud, a secure cloud-based platform that connects and manages its BactoSense instruments, enabling real-time monitoring and optimization of microbial water quality.
Hear how Scottish Water has completed its £235 million Ayrshire Glasgow Resilience Project - customers across Greater Glasgow, Ayrshire and East Renfrewshire will now benefit from a more secure and resilient water supply.
Hear how United Utilities is accelerating its investment to reduce spills from storm overflows across the Northwest.
Find out more about the remarkable career opportunities on offer at WSP - scroll down to watch the inspirational video.