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how the market works

Eligible businesses and other non-household customers can shop around for their water and wastewater retailer like they do for other goods and services. Retail suppliers compete for customers by offering them the best deal.

Unless customers switch to a new water retailer, 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 have been able to choose their water company for some time. Since the water market opened on 1 April 2017, the UK Government has estimated that about 1.2 million more customers are now 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 largely depends on:

  • whether premises are used mainly for business, rather than domestic use
  • where the 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 is the largest retail water market in the world.

The UK Government estimated that opening the market to competition will 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 has also brought environmental benefits too.

Find out more about the benefits of the market

 

how customers are protected

Customers are protected in a number of ways.

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 must 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.
  • Ofwat is encouraging 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 monitors the performance of the market – through a range of measures, from defined targets to customer experience.

making Open Water work

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

The Open Water programme is led by three partner organisations, Ofwat, Defra and MOSL, working with existing water companies across England, Scotland and Wales.

Defra

The Department for the Environment, Food and Rural Affairs (Defra) has overall responsibility for reforming the water market in England. Defra is responsible for governing the process and making sure the necessary legislative changes are in place as per the Water Act 2014.

Ofwat

Ofwat, the Water Services Regulator, is responsible for implementing and monitoring the new market. This involves 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 customers’ awareness of the new market by providing factual information and guidance, and for protecting customers through conditions in company licences and a Code of Practice.

MOSL

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

The market relies on MOSL’s systems to process billing transactions of £2.4 billion each year and make the necessary inter-company payments. As the market operator, MOSL makes sure all companies can enter, exit and participate freely in the market.

 

supplying retail services

The open water market also offers the opportunity for new companies to enter the market and compete on equal terms with other retailers.

All retailers will need to obtain a new national licence from Ofwat before they can operate in the open water market in England. This licence is known as a water supply and/or sewerage licence for retail services, or WSSL.

Retailers and wholesalers in the new market must comply with codes of practice that govern the two-way arrangements between a wholesaler and a licensed retailer, as well as a Customer Protection Code of Practice to make sure businesses are protected and not disadvantaged.

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