Ofwat has launched a consultation on its proposals to release Thames Water from binding commitments and undertaking resulting from the competition investigation it opened in June 2019 after allegations that the water company was abusing its dominant position to harm competition in the business retail market.

The economic regulator launched the investigation under the Competition Act 1998 (CA98) for water and sewerage services as the result of a complaint against Thames Water.

Acceptance of the proposals would remove the commitments and undertakings as binding and enforceable requirements on the company.

Ofwat opened an investigation under the CA98 following allegations that Thames Water was abusing its dominant position in its area of appointment to harm competition in the business retail market for water and sewerage services.

The investigation identified a number of competition concerns in relation to Thames Water's approach to installing smart water meters for business customers and its provision of access to the water usage data it gathers from those meters “on fair, reasonable and nondiscriminatory terms.”

Thames Water subsequently offered commitments under section 31A of the CA98 to address the concerns – at the end of March 2022 Ofwat published its decision to accept the binding commitments.

Thames Water committed to :

changing its approach to smart metering and providing retail water companies and their business customers with a choice of means to access the water usage data they require improving its understanding of customer needs in the market

improving its governance and decision-making processes to ensure that the impact of its decision on others in the competitive market is properly considered.

The commitments also included deadlines for the utility to complete specific actions and to provide evidence to Ofwat to demonstrate that this was the case, with all actions required to be completed by no later than 31 December 2022. In addition, Thames was also required to provide Ofwat with six-monthly compliance monitoring reports.in order for Ofwat to effectively monitor compliance.

Ofwat’s CA98 investigation originally also considered allegations regarding the accuracy of customer data that Thames Water had made available to retailers at the time of the opening of the business retail market in April 2017.

In November 2020, Ofwat then decided that the CA98 was “no longer the appropriate tool” for it to consider and address the data accuracy issues and opened a separate investigation using its powers under the Water Industry Act 1991 (WIA91). The economic regulator also considered whether Thames had appropriate management resources and systems of planning and internal control in place to ensure that it was able to carry out its regulated activities.

The investigation concluded that Thames Water had contravened:

• one of its Licence conditions by failing to ensure that the data it collected and uploaded into the business retail market system ahead of market opening was sufficiently accurate to enable the effective functioning of the business retail market.
• certain requirements of the Market Terms of the Wholesale Retail Code by failing to maintain accurate data and correct known errors
• Condition P12 of its Licence by failing to ensure that it had in place adequate management resources and systems of planning and control to carry out its regulated activities

Thames Water offered undertakings to address the issues, included assurances that would review and revise the way in which it handles complaints, manages its data, and undertakes major, non-asset or infrastructure, projects to ensure that similar issues would not arise in future. The watr company was also agreed to provide an £11.3 million compensation package that refunded retailers and their business customers for any overcharging that arose. is a standard agreement between each wholesaler and

In January 2023 Thames Water provided Ofwat with two compliance reports to demonstrate the steps it had taken to comply with its commitments and undertakings. Thames confirmed that “in its view (both) had been fully implemented.”

In considering whether both had been satisfied (and therefore whether the Commitments and/or the Undertakings should be released),  Ofwat contacted the complainant who raised the initial allegations to seek its views on whether they had been complied with, together with providing supporting evidence if it believed that Thames Water had not complied with the Commitments and/or Undertakings.

Ofwat said that having reviewed the evidence provided by Thames Water and the views of the complainant, it was satisfied that the utility had complied with both and completed the actions required within them.

Ofwat’s consultation paper says:

“These actions have corrected the problems that we identified during our investigations and have embedded processes and procedures into Thames Water's business that ensure it takes account of the effects of its decisions on retailers and their customers and that it better handles complaints raised with it. This should avoid similar problems to those identified in our investigations from arising in future….

“We no longer consider the additional protections provided by the requirements and monitoring of the Commitments and Undertakings to be necessary to provide assurance that our original concerns have been addressed. The issues we identified in our investigations primarily stemmed from a lack of proper processes and management oversight.

“Thames Water's increased awareness of its obligations and the new processes and governance arrangements that it has embedded in its business provide us with reassurance that these concerns should not arise in future. Thames Water is required to comply with its legal and regulatory obligations, and we are satisfied that these provide sufficient ongoing protection for retailers and their business customers…..

“Two years have elapsed since we accepted the Commitments and the Undertakings. The processes and procedures introduced by Thames Water as a result have remained in place and are now embedded in its governance and operations.

“The concerns we identified during our investigation mainly stemmed from Thames Water lacking appropriate processes and procedures to manage its legal obligations effectively. Having implemented the processes and procedures... we see no reason to believe Thames Water would look to depart from them.”

Ofwat is now seeking comments on its proposal to release the the water company from the commitments and undertakings. Deadline to submit responses is 31 May 2024 - click here to download the consultation paper.