The Competition and Markets Authority has granted Castle Water permission to appeal Ofwat’s decision of 5 February 2025 to reject the business retailer’s request for a change to the Wholesale Retail Code.

Castle Water had proposed an amendment to section 9.11 of the Wholesale Retail Code to relieve retailers of the obligation to provide credit support to a wholesaler where, and for so long as, that wholesaler does not have a stable credit rating of BBB/Baa2 or higher.

Castle Water had sought permission to appeal the Ofwat’s decision on the following grounds:

1. Ground 1: Ofwat failed properly to have regard to, and/or failed to give the appropriate weight to, the objective to protect the interests of consumers, wherever appropriate by promoting effective competition.
2. Ground 2: Ofwat was wrong in its findings about the response of financial institutions to wholesaler distress.

The appeal process relates to arrangements between water wholesalers and retailers who in turn supply the business retail market.

Castle Water had stated in the its appeal application that its interests are materially affected by Ofwat’s decision to reject its proposal because the current credit security requirements of the Code have a disproportionate impact on independent non-integrated retailers. Castle Water cited the challenges it has experienced in posting credit, and in securing finance and/or the terms on which it has been able to secure finance, “where wholesalers are either in or perceived to be at risk of financial stress or distress, and the risk to effective competition between retailers that disparate impact poses.”

Following the opening of the water retail market for business in England in April 2017, enabling around 1.2 million business customers in England and eligible business customers in Wales to choose their supplier of retail water and wastewater services, Castle Water acquired the non-household retail activities of Thames Water.