Ofwat opens separate investigation into Thames’ credit terms

Ofwat has opted to split out into a separate investigation the part of its Competition Act 1998 investigation into Thames Water that is dealing with contractual credit terms.

The issue concerns whether the £25,000 credit limit that Thames Water has set for non-primary services is consistent with the requirements of the Wholesale Retail Code (WRC). In its tariff document for 2019/2020, Thames said that primary charges credit support will be in line with the requirements of the WRC, while for non primary charges: “If services ordered but not yet paid for reach or exceed a value of £25,000 we will issue an early invoice for the relevant amount and payment of this amount will be required in order for you to continue to be able to receive a range of chargeable services (other than in-flight services). No new service requests will be accepted until the owed amount has been paid.”

The issue was previously being considered as part of Ofwat’s June 2019 investigation into allegations that Thames Water had contravened the prohibition in Chapter II of the Competition Act 1998 by abusing a dominant position. The allegations related to:

  • the approach that Thames Water has taken when installing digital smart meters and the impact that this has had on providers of data logging services and their customers;

  • the accuracy of the data about customers that Thames Water made available to retailers at the time of the opening of the business retail market; and

  • the fairness of certain contractual credit terms that Thames Water applies to retailers.

Ofwat explained that it no longer considered that the CA98 is the most appropriate tool to use in relation to the allegation about contractual credit terms, rather that this can be more effectively considered under sections 66DA and 117F of the Water Industry Act 1991 in relation to compliance with the WRC. The other strands of the investigation under the CA98 will continue.