Tue, Oct 21, 2025
Text Size
Tuesday, 30 September 2014 07:54

Ofwat publishes new guidance on customer connections and competition

Water industry regulator Ofwat has published new guidance on its general  expectations for how monopoly water and sewerage and water only companies in England and Wales should provide and charge for new connections.

Ofwat has published the guidance to avoid disputes occurring between customers and their company and to enable disputes to be resolved in a timely manner where they do occur.

The guidance says that new connections – either in the form of an individual property or large-scale development - bring new customers to the water sector in England and Wales, described by Ofwat as “important drivers of the national economy.”  Ofwat says the sector therefore has a responsibility to enable them and their contribution to economic growth and sustainable development.

If a property requires a new water main, sewer, service pipe or lateral drain for domestic purposes, the owner or developer can ask the local water company to install the infrastructure. Alternatively, the owner or developer may choose their own contractor to do the work, known as ‘self-lay’. The monopoly water company will then take over responsibility (adopt) for laid infrastructure that meets the terms of its agreement with the owner, developer or self-lay organisation that carries out the work.

New connections one of few existing areas for competition on services

The guidance says that providing new connections for individual properties or wider development sites is one of the few areas of the water and sewerage sector in England and Wales where other parties can compete with monopoly water and sewerage companies to provide services.

Ofwat has set up a new web page which sets out more detailed guidance on the levels of service which includes a specific requirement that the monopoly companies must offer their non-contestable services on equivalent terms for all of their customers. This includes circumstances where a monopoly company is providing non-contestable services to another part of its own business – which may be competing with other new connections providers – to enable it to provide a contestable service.

Investment and business planning must be based on robust assumptions of growth

Specific provisions on planning for and enabling growth also include:

  • efficiently planning the development of their networks, with investment and business planning based on robust assumptions of growth
  • being able to deliver strategic, joined-up solutions where there are multiple development sites coming forward, rather than a succession of smaller schemes.

The guidance says the monopoly companies water should have “ongoing conversations” with their new connections customers, local planning authorities and other relevant stakeholders to understand and plan for the timing, location and impact of future development sites.

Ofwat has  also published a separate new ‘Charging for new connections’ web page intended to provide further clarity on its general expectations for key areas of dispute between customers and monopoly companies under the current charging arrangements for new connections. Common areas of dispute flagged up the regulator include the handling of:

  • administration and overhead costs;
  • off-site works;
  • apportionment of additional capacity;
  • income offset; and
  • infrastructure charges.

Water companies must treat alternative service providers as customers i.e not competitors

Interestingly, the guidance also explicitly states that all the monopoly water companies should recognise developers, Self Lay Organisations and the new appointments and variations (NAVs ) which replace their own services i.e. their potential competitors - as customers.

On improving transparency for customers, Ofwat says it recognises there is “limited transparency”  in the charging arrangements for new connections, particularly in terms of the relationship between and use of infrastructure charges and requisition and self-lay charges. The regulator is currently considering the transparency of costs and charges as part of its work on the future charging arrangements for new connections and regulatory reporting and accounting requirements for monopoly companies.

The Water Act 2014 will make significant amendments to existing legislation relating to new connections, including new charging rules for new connections, which Ofwat will issue following guidance from the Secretary of State for Environment, Food and Rural Affairs. The existing charging arrangements will continue until that part of the Water Act 2014 is brought into force and the new charging rules are in place.  Ofwat  said it will publicly consult on the new charging rules in due course. The Water Act 2014 also includes provisions for new codes and rules for monopoly companies and providers of infrastructure for adoption.

Commenting on the need for the new guidance, Ofwat said:

“We are aware of longstanding concerns and frustrations about the levels of service and charging arrangements for new connections. We want to help improve the services new connections customers receive – particularly where they have a dispute with their company.”

Ofwat concludes the guidance by saying it will be working with monopoly companies and their customers through the end of 2014 and into 2015 to further explore new connections issues.

News Showcase

Sign up to receive the Waterbriefing newsletter:


Watch

Click here for more...

Login / Register




Forgot login?

New Account Registrations

To register for a new account with Waterbriefing, please contact us via email at waterbriefing@imsbis.org

Existing waterbriefing users - log into the new website using your original username and the new password 'waterbriefing'. You can then change your password once logged in.

Advertise with Waterbriefing

WaterBriefing is the UK’s leading online daily dedicated news and intelligence service for business professionals in the water sector – covering both UK and international issues. Advertise with us for an unrivalled opportunity to place your message in front of key influencers, decision makers and purchasers.

Find out more

About Waterbriefing

Water Briefing is an information service, delivering daily news, company data and product information straight to the desks of purchasers, users and specifiers of equipment and services in the UK water and wastewater industry.


Find out more