Bid launched to find enduring fix for debt in business market caused by pandemic

A working group has been convened between Ofwat, Water UK and wholesale water companies to find an enduring solution to the problem caused by late or non-payment of water bills by businesses hit by Covid 19.

This followed an urgent code change from Ofwat last Monday, deferring 50% of settlement charges for up to three months – and a letter from wholesalers to Ofwat, expressing concern at this transfer of risk. Among the key questions the new group is considering are what proportion of risk wholesalers should pick up, and how can overall costs be contained.

Ofwat said its intention is that an enduring solution will be in place by the May 2020 settlement run at the latest. That came in a separate letter sent jointly from Ofwat and MOSL to retailers last week, reminding them of their obligations and expectations regarding the code change. Specifically, retailers were told the following.

• No refunds are due for retailer payments made to wholesalers by the March due date, including where these are in excess of the 50%

• Where retailers can afford to pay more than the 50% minimum, they must do so.

• Retailers should not bank on paying only 50% in May, as that provision will only stand if an enduring solution has not been found.

It also clarified that interest will not accrue on any unpaid amount until the end of May.

In the same letter, Ofwat and MOSL also set out their expectations on the other urgent code change implemented last Monday, concerning temporary vacant flags for premises closed as a result of Covid-19. They told retailers they must obtain proof of vacancy to activate this option, and that if it transpires that water has been consumed at a premises marked vacant, then the retailer will be liable for charges associated with that consumption.

The regulator added: “Where Ofwat sees evidence that retailers are not meeting its expectations in respect of these code changes, Ofwat will consider use of the full range of tools at its disposal, including where relevant penalties via enforcement action.”