The impacts of COVID-19 are being felt across the whole of the UK economy and throughout each and every sector. In water, the business retail market in England will inevitably be affected, both through businesses closing and as social distancing affects retailer operations.
To ensure businesses affected by COVID-19 are not being pursued for non-payment of water bills, to minimise the disruption that retailer failure could cause to business customers and the trading parties who are operating within it; Ofwat worked closely with the market operator MOSL to put in place urgent retail code modifications at the end of March. These included:
- restricting retailers from charging interest or late payment fees for late payments or requesting that customers be disconnected at this time;
- deferring payment of a proportion of wholesale charges to reflect late payment by non-household customers; and,
- use of a temporary vacant flag in the market database to reflect that a closed business is not consuming water.
The code modifications on wholesale charge deferral are an interim solution as Ofwat and MOSL turned to look at a package which would be more enduring, and Ofwat has launched a consultation on those measures to protect the interests of customers.
Ofwat is consulting on the following proposals:
- A potential code modification to continue to provide liquidity to retailers for a further defined period of time
- The option of a cap on retailer bad debt exposure
- The option of a cap on wholesalers from bad debt exposure following any potential exit of a retailer from the market.