Ofwat puts industry on notice to play fair on self lay

Ofwat has written to water companies reminding them of their competition law and charging rules obligations to self lay providers.

The regulator said it had received a number of complaints over the last 12 months in which it has been alleged that incumbent water companies, through their charges, contractual terms and/or actions, have made it difficult for self-lay providers to compete and operate efficiently in the developer services markets. Senior director, customers and casework, Emma Kelso said: “This is understandably of great concern to us.”

She summarised: “The complaints allege that it is not clear as to what services are included in the design fees and other developer service charges or how the charges for these services are calculated or compare between requisitioned and self-lay provision. It has also been questioned as to whether the charges allow sufficient margin to enable SLPs to compete with water companies for the provision of services. Similarly, concern has been raised that some water companies are not applying a consistent methodology when calculating income offsets in their charges for requisitions as when they calculate asset payments for SLPs. This prevents a level playing field that would allow for effective competition to take place.”

Kelso said on the basis of Ofwat’s assessment of the complaints, “it is not clear to us that water companies are fully and clearly complying with the requirements of the Charging Rules”. She continued: “I am therefore writing to all incumbent water companies to remind them that, given their position of dominance in a number of markets in their appointment areas, each company has a special responsibility to ensure that its conduct in those markets does not prevent, restrict or distort competition.”

She warned: “Having put all companies on notice of our concerns via this letter, we are now more likely to consider escalating our response through our formal enforcement powers where these issues are not addressed promptly, or if we identify any future breaches of the Charging Rules or of competition law.”

• Ofwat is consulting until on charging rules for new connections and new development for English companies from April 2020.