Ofwat to review how it monitors business retail market operation and performance

Ofwat has unveilerd plans will review its approach to non-household retail market monitoring and customer research during 2023-24.

The regulator said this will include considering the extent to which competition is protecting customers' interests, to ensure its ongoing monitoring targets relevant areas of the market. It will also seek to align its work with industry objectives, such as the market priorities set out by the Strategic Panel;

The news came as Ofwat published a short update on the sixth year of retail trading (2022-23). This replaced its usual ‘State of the Market’ report. Ofwat explained its focus during the year had been on reviewing the Retail Exit Code price caps, and consequently it had not commissioned the usual customer insight survey or sought extensive data from retailers. The update was therefore based on MOSL data on customer activity and complaints information from CCW, as well as activities to address market frictions.

Among the trends identified in the update were:

• incumbent retailers’ market share fell from 93.8% in 2021-22 to 92.2%, with gains being made by new entrant and self suppliers;

• at 3.5% up from 3.2%, switching rates returned to pre-Covid levels but remained lower than in the first three years of the market. The switching rate for high consumption customers was three times higher than for low consumption customers; and

• written complaints to retailers fell 16%.