Strategic Panel sets out a path towards relaxing retail price caps and making the market flourish

Retail price caps could be reviewed and potentially relaxed earlier than planned if the business retail market can achieve certain conditions that would afford protection to customers while enabling competition to grow. 

That’s according to the Strategic Panel’s final Roadmap to a flourishing market – a wide ranging stocktake of what needs to change to make the market work better and deliver benefits for customers of all sizes, while maintaining appropriate safeguards.

The price cap suggestions respond to concerns, particularly from retailers, that the Retail Exit Code (REC) price limits constrain competition. These were last reviewed in 2021/22 and came into force in 2023, to stand for up to five years.

The roadmap identified 31 market conditions which need to be met to enable the market to flourish. These fell into three categories: 

• Customer engagement and choice – Customers of all sizes are clear about how the market operates, have confidence in exercising the choices that are available and know they are protected from malpractice. 

• Accurate and accessible data – Customer experience and market operation are underpinned by accurate data that is accessible and that can be used to develop innovative solutions for customers.  

• Processes, capability and economics – Customers embrace the opportunities to deliver water security nationally through investment in smart technology and the establishment of market and customer incentives to reduce demand.

The Panel has set out who needs to do what and by when to achieve these conditions, as summarised in the graphic. It has indicated that the early establishment of the customer engagement and protection conditions, delivered by the actions circled in red, will help support any decisions to review the REC.

Delivery of the roadmap will now become the prime focus for the Panel, replacing its existing Priorities document. Its work will include progress reporting and revising the roadmap in line with developments.

Stakeholders are convening today at the Strategic Panel’s Open Forum, to discuss and plan further.