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how the market will work

Businesses and other non-household customers will be able to shop around for their water and wastewater retailer like they do for other goods and services. Retail suppliers will compete for customers by offering them the best deal.

Eligible customers can renegotiate or shop around now – but they will not actually switch until the market opens in April 2017. Unless customers switch, they will stay with their existing supplier.

who is eligible?

Business and other non-household customers in England who use more than 5 million litres of water a year can already choose their water company. When the market opens in April 2017, the UK Government has estimated that about 1.2 million more customers will become eligible to choose their retail service supplier and shop around to get the best deal.

A small number of eligible customers are in Wales.

Eligibility will largely depend on:

  • whether premises are used mainly for business, rather than domestic use
  • where an existing water and/or wastewater supplier is based

Use our eligibility guide to find out whether your business is eligible.

the costs and benefits of the Open Water market

The Open Water market will be the largest retail water market in the world.

The UK Government has estimated that opening the market to competition could deliver more than £200 million in overall financial benefit (total benefits minus total costs) to the UK economy.

This includes:

  • lower bills, mainly as a result of better water-efficiency
  • improved service standards
  • more tailored services to better suit individual business needs

Opening the water market will also benefit the environment too.

Find out more about the benefits of the market

 

supplying retail services

In order to become a retailer – or for a customer to supply themselves with retail services – businesses must complete a simple, three stage process:

  • Stage 1 – apply for a licence on the Ofwat website, which includes complying with market codes and other obligations
  • Stage 2 – undergo a process of assurance and technical checks run by the Market Operator. You can find out more about these checks on Market Operator Services Limited’s (MOSL) website
  • Stage 3 – buy wholesale services and win customers (or supply yourself)

making Open Water work

Open Water is the name given to the programme set up by UK Government to open the water retail market for businesses, charity and public sector customers in England in April 2017.

The Open Water programme is being led by three partner organisations, Ofwat, Defra and MOSL, working with existing water companies across England, Scotland and Wales, as well as companies who wish to become a licensed retailer once the market opens:

Defra

The Department for the Environment, Food and Rural Affairs (Defra) has overall responsibility for reforming the water market in England. Defra has overall responsibility for governing the process and making the necessary legislative changes are in place as per the Water Act 2014. In February, the Secretary of State for Defra, the Rt Hon Andrea Leadsom MP, will determine whether the market opens in April 2017 as currently planned.

Ofwat

The Water Services Regulator, (Ofwat) is responsible for implementing the new market, including aspects such as setting the charging guidelines, the licensing regulations (all companies need to be licensed before they can operate), and the service standards.

Ofwat is also responsible for raising customer awareness of the new market through the provision of factual information and guidance, and for protecting customers once the market opens through conditions in company licences and a Code of Practice.

MOSL

Market Operator Services Limited (MOSL) is responsible for procuring, building and testing the essential central IT systems that will enable non-household eligible business, charity and public sector customers to switch between water retailers when the market opens.

Its systems will be relied upon to process billing transactions of £2.4 billion each year and make the necessary inter-company payments. As the market operator, MOSL will ensure that all companies are able to enter, exit and participate freely in the market.

 

how customers will be protected

Customers will be protected in a number of ways once the market opens.

At the most simple of levels, a customer is protected by their ability to choose; one of the advantages of a competitive market is that if you are unhappy with your retailer, you can switch to a new one – depending on the length of your contract.

  • If you decide to stay with your existing supplier there is a maximum price (known as a default tariff) they can charge you for a standard level of service. If you stay with your current supplier on the default tariff,  then you are on what’s known as a deemed contract.
  • If you decide to switch, you will receive a formal contract from your new retailer. This will detail price you will pay for the services you will receive. This has the same legal protections as any other agreement for the supply of goods and services.

All retailers will have to comply with Ofwat’s Customer Protection Code of Practice. This sets out a number of measures in which customers – particularly small to medium sized enterprises – are protected. These measures include:

  • Limiting to the period for which a customer can be back-billed if a bill has been incorrectly paid, to setting out the cooling-off period once a contract has been signed.
  • Ensuring that retailers deliver basic guaranteed standards of service (known as GSS). For example, retailers must give you clear information in your contract and not mis-sell services to you. Where they fail to meet these standards, they will have to pay you a set amount of money.
  • Once the market opens, Ofwat intends to encourage Third Party Intermediaries (known as TPIs) – which are companies or agents who act as a broker or a go-between when negotiating a contract for you – to sign up to a voluntary agreement to operate ethically and in the customer’s best interest.

In addition, Ofwat will monitor the performance of the market – through a range of measures, from defined targets to customer experience.

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