Ofwat to boost financial resilience requirements for new appointees

Ofwat is consulting until 7 November on two proposals that would give it closer oversight of new appointments and variations (NAVs) as the market grows.

It has proposed modifying NAV licences to bring all ring-fencing provisions, which incentivise companies to maintain appropriate levels of financial resilience, up to date and ensure consistency across providers. At present the precise wording and coverage of ring-fencing conditions varies between NAV licences.

Ofwat is also planning proactive monitoring of NAV performance as the market grows, to ensure apointees deliver in the best interests of customers. It intends to use monitoring insights in its licensing decisions, including in its assessment of the principle that customers should be no worse off with the new appointee than if they were with the incumbent.

The number of NAV customers has increased considerably in recent years and will continue to do so as existing sites become occupied, and new sites are added.