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becoming a water retailer

Companies providing the retail services in the open water market in England play a key role in what is the largest market of its kind in the world.

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

And for the first time in England, the retail water market also offers the opportunity for new companies to compete on equal terms with other other retailers.

Wholesalers are required to offer the same tariffs to all retailers – including 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.

These packages can create market-leading opportunities by:

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

This creates an excellent opportunity for new entrants with competitive, innovative packages that offer value for money.

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

The companies best placed to take market share will:

  • quickly 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

Only companies holding one of the new national supply licences from Ofwat 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 retail water market, codes of practice have been produced by Ofwat, Defra and the market operator, Market Operator Services Limited (MOSL). These codes set out how the market participants must work with each other to make sure the market remains competitive and fair.

Retailers and wholesalers in the new market must comply with the Wholesale Retail Code (WRC). This statutory code 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.

Customer Protection Code of Practice ensures that customers 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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