Castle Water challenges “unacceptable flaws” in settlement arrangements

Settlement arrangements in the non-household market are not fit for purpose, Castle Water’s chief executive John Reynolds indicated in an open letter to Ofwat, MOSL, the Strategic Panel and CCW. 

He identified “three major unacceptable flaws”:

• Slow settlement – Having to wait up to eight months to return incorrect charges to business customers is both unacceptable and out of kilter with the modern systems used in sectors like banking where balances can be calculated multiple times per day. While it is welcome that the Strategic Panel’s Roadmap to a flourishing market targets smart settlement, this needs to be prioritised and accelerated. 

• Lack of meter accuracy – Reynolds wrote: “Customers would find it completely unacceptable if they knew that meter accuracy standards accept a variation of up to 20%.” He further pointed out: “Meter accuracy needs to be addressed in tandem with the rollout of smart meters – the implications of not doing so are obvious, given meter tolerances are greater than targeted efficiency gains.”

• Lack of bulk capacity –  Reynolds argued the market Codes still presume a very manual and supply point-by-supply point data flow, “which is inefficient and slow. The failure to build systems to provide information flows on a bulk basis lets down customers, and is inefficient to administer.”

Reynolds called for the letter recipients to respond with proposals to address these issues.

The letter then went on to raise other long running issues that Reynolds said remain unresolved, and are not being prioritised or adequately addressed by the new Roadmap to a flourishing market. He said this is despite these all being important issues for customers, and affecting confidence in the market:

• Rateable Value charging – this results in many of the smallest customers being “systematically over-charged”. 

• Sub meters – retailers remain unable to enter sub-meter reads into the Central Market Operating System. 

• Estimated transfer (T) reads – these are in widespread use and “against both the Codes and customer interests”. As a minimum, Reynolds said MOSL or the Panel should publish monthly the percentage of T reads which are estimated submitted by each retailer.

• Blocked switches – Ofwat is working to address this, but in addition MOSL or the Panel should publish statistics on the percentage of switch attempts blocked by each retailer.

Reynolds said he welcomed some aspects of the Roadmap, notably the focus on ensuring data is made available to customers.