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becoming a water retailer

Companies providing the retail services in the new market in England will play a key role in what will be the largest market of its kind in the world.

The open water market will offer growth opportunities for the regional water companies (often referred to as ‘incumbents’, ‘NAVs’, ‘appointed companies’ and ‘appointees’), which are required to set up new independent retail arms to operate in the new market, to ensure fair competition.

However for the first time in England, the new market also offers the opportunity for new companies to enter the market and compete on equal terms with other retailers.

Wholesalers will be required to offer the same tariffs to all retailers – whether new entrants, retailers created by other regional water companies and their own retail arms, ensuring fair competition for all.

opportunities for retailers

The opportunities available for retailers in the Open Water market are dependent on how each retailer chooses to determine its customer offer.

Retailers can position themselves in the market with competitive pricing and service packages that offer added-value.

The packages can create market-leading opportunities by being:

  • locally and nationally competitive
  • tailor-made to meet unique business needs
  • culturally and socially responsible
  • raising customer service levels

This creates an excellent opportunity for new entrants offering competitive, innovative and value for money packages to switching customers.

Retailers could also choose to offer premium, bespoke and tailored services to their customers.

Companies that will best placed to take market share will:

  • be early to recognise the possibilities of an open marketplace
  • embrace commercial and cultural change
  • demonstrate they can meet high customer expectations
  • help underpin the high level of customer confidence in an open market
  • work to boost the numbers of customers switching and saving

The net retail margin that retailers can achieve depends on each retailer’s pricing policies and positioning in the market, however Ofwat has identified a broad range of possible values.

licensing

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 the water supply and/or sewerage licence(s) for retail services (or WSSL) from Ofwat.

To supply retail water services in Scotland, new entrants must apply for a supply licence from the Scottish regulator, the Water Industry Commission for Scotland (WICS).

There are separate processes for obtaining licences from Ofwat and WICS. If you wish to hold both you may send your applications using the separate forms but in a single submission to either regulator.

Find out more about the licence application process and download the WSSL application form from Ofwat.

codes of practice

In designing the framework for the new market, codes of practice have been produced by Ofwat, Defra and the market operator, Market Operator Services Limited (MOSL), that set out how the market will work – and how the market participants will work with each other.

Retailers and wholesalers in the new market must comply with the Wholesale Retail Code (WRC), a statutory code which sets out the business terms, market terms and operational terms that will apply to all two-way arrangements between a wholesaler and a licensed retailer. You can view the market codes on the MOSL website.

To protect customers there is also a Customer Protection Code of Practice to ensure that businesses and, in particular micro-businesses, are protected and not disadvantaged in areas such as billing, supply and tariffs. You can find out more about the Customer Protection Code of Practice on the Ofwat website.

It’s likely that further codes will be introduced for retailers and customers as the market develops.

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