Ofwat set to extend business back billing limit to up to 24 months

Businesses with significant water costs and whose invoices are based on unplanned settlement runs can be back billed by up to 24 months, rather than the 16 months set out in the Customer Protection Code of Practice (CPCoP), under a proposed decision by Ofwat.

The regulator is running a short consultation until 7 February on the plan to bring arrangements in the CPCoP on back billing in to line with arrangements in the Wholesale Retail Code governing the payment of primary charges to wholesalers by retailers. It reasoned: “Aligning the regulatory framework is necessary to ensure that retailers are not left exposed to charges which they are unable to recover from the relevant non-household customers.”

Ofwat pointed out the usual 16-month restriction on back billing set out in the CPCoP will apply in for the majority of non household customers. It said the extension would only apply to those “who have an inaccurate read and that, either combined with other non-household customers’ inaccurate reads or in isolation, meets the relevant materiality threshold for a trading party to request a Post RF or Dispute Settlement Run. A retailer will only have up to eight months following the issue of the Final Settlement Report to issue a back-bill to a non-household customer.”

It also emphasised the need for unplanned settlement runs to be treated as a last resort by retailers; rather they should undertake data correction prior to final settlement runs and partake in sector initiatives to improve data quality.

The ruling is set to be implemented on 28 February.

In the same consultation, Ofwat sought views on additional proposed changes to the CPCoP, concerning payments, various definitions and final bills. The consultation on this element runs until 21 February and is set to be implemented three months after decisions are taken.