Ofwat to expedite retail market bad debt consultation

Ofwat has confirmed it will look at giving retailers an earlier-than-planned decision on aspects of how it will treat business customer bad debt arising because of the coronavirus pandemic.

In a joint statement with MOSL issued last week, Ofwat said it will consult before the end of Q1 2021 on preferred options in relation to the mechanism, timing of recovery and sharing factors, should customer bad debt exceed 2% of turnover and regulatory protections be provided for a portion of the additional exposure. It will consult on other aspects at a later date.

Elsewhere in the statement, Ofwat and MOSL confirmed the following.

• The suspension of Market Performance Standard charges will be extended until 1 April 2021 in light of the latest lockdown, but charges on Operating Performance Standards will resume from 1 January give relatively good performance from wholesalers against these despite Covid restrictions.

• There was no change on temporary vacancy flag policy. This will not return. Retailers were told to provide meter reads where possible, if need be through customer submission. Where this is not possible, retailers should engage with customers and wholesalers to obtain an accurate estimate of consumption, including by using Yearly Volume Estimates.

• Covid-19 Repayment Plan policy stands. Customers who can pay are expected to do so; retailers are expected to tailor plans for those with payment difficulties.

• There will be no further liquidity support from wholesalers.