Ofwat reports on levelling the playing field for new appointments and variations

Ofwat has set out how it has addressed the barriers to New Appointments and Variations (NAVs) identified in an October 2017 study by Frontier Economics, and a November 2018 consultation.

In a document confirming its NAV statement of policy and related conclusions, it reported:

• Application process – NAVs said there was often uncertainty over whether a licence would be granted, and that the time the application process takes precludes NAVs from competing for smaller sites. Ofwat said it had streamlined the application process to cut the target timescale down from 110 to 85 days, as well as clarifying its approach on various aspects and assigning a dedicated Ofwat contact to each NAV applicant.

• Access to information – Many said this was inadequate. Ofwat pointed to a Water UK led working group to address the shortcomings, and to the development of a Code of Practice for bulk supply/discharge agreements between incumbents and NAVs. It also cited D-MeX, Rachel Fletcher’s recent letter to water CEOs on supporting markets, and a licence modification requiring companies not to discriminate between their own offerings and those of alternative providers.

• Pricing – Ofwat said it had issued new bulk supply charging guidance which changes the way bulk supply charges are determined to facilitate greater competition.

• Awareness – Some said awareness of NAV options was low among developers, the Drinking Water Inspectorate and the Environment Agency. Ofwat said it now had a programme of providing information to raise awareness with developers and other agencies, including online, at events and through meetings.