In a move that could foreshadow a second retailer departure from the business market, Ofwat has blocked Tor Water from taking on any new business customers following a breach of the Wholesale Retail Code for non-payment of money owed to a wholesaler.
Tor has been classed as a “Defaulting Trading Party” after repeatedly failing to pay more than £5,000 exclusive of VAT. The company has also failed to adequately reply to repeated requests for information from Ofwat or to respond to informal regulatory action.
Importantly, this included failure to provide Ofwat with a Certificate of Adequacy by 1 April (an annual requirement) providing assurances it has, and will have for the following year, all the management, financial, technical, operational and other resources needed to meet its obligations. Ofwat pointed out: “This is significant because, in the absence of this assurance and in light of the default notifications we currently do not have sufficient assurance that Tor has the necessary resources to fulfil its obligations under its licences and the [Water Industry] Act.”
Ofwat issued a direction to Tor to comply with the Wholesale Retail Code and pay any outstanding and future undisputed invoices. Ofwat said it was appropriate to restrict the transfer of new premises to Tor (MOSL has been directed not to process any transfer requests made after 30 May) until the undisputed sums are paid because late payment is a potential cause for termination of its Wholesale Contract under the Code.
It explained: “Limiting the extent to which non-household customers are exposed to the risks associated with a potential contract termination for late payment is appropriate in these circumstances.”
The regulator added that issuing the direction should “prevent similar cases occurring in the future by reminding licensees of the importance of complying with their obligations under the Code and the Act.”