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Thursday, 26 September 2013 07:13

Ofwat seeks input on ensuring level playing field for retail competition in 2017

 

Water industry regulator Ofwat is inviting comment on two new discussion documents it has published in the run-up to the introduction of retail competition in April 2017 in the non-household sector.

A level playing field for the water market – a discussion document

  • considers some of the potential tools currently in place to provide for a level playing field;
  • outlines tools that could be used to strengthen this framework, drawing onexperiences from other network industries; and
  • sets out Ofwat’s proposed approach to the phased removal of the ‘in-area trading ban’ licence condition.

Introducing the paper, Ofwat said it had discussed the content of the document with Open Water and the High Level Group, and was now inviting views on the questions and issues it addressed to inform its thinking in its work to help to implement the proposed changes.

Alongside Ofwat also published a separate paper Water market governance arrangements – a discussion document. Both documents are intended to be read together and the regulator is seeking responses to both. The governance arrangements for market codes will play a key role in helping ensure that there is a level playing field.

Ofwat emphasised that the discussion document was not part of the price review process and therefore did not in any way fetter or pre-empt regulatory discretion and policy decisions relating to the 2014 price review. Ofwat said that for the avoidance of doubt, if there was any inconsistency between this discussion document and its price review documents, for the purposes of the price review the price review documents would take precedence over the discussion paper.

Key questions the regulator is seeking to obtain responses to include:

  • Do you consider that further regulation, beyond that provided by existing tools, is required to ensure a level playing field?
  • If so, what form do you think such regulation should take?
  • How might we measure the effectiveness of the arrangements?
  • How do you think the arrangements might evolve over time?

The papers reveal some interesting pointers into current Ofwat thinking on how competition in the non-domestic retail market might develop. However, the regulator is clearly not anticipating that changes to the marketplace will come about overnight. The paper states:

“We think that there will continue to be an ongoing dialogue about the issues contained in this document. This is one of a series of both Ofwat and industry-led discussions that will be conducted over the next few years.”

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