Water industry regulator Ofwat has set out its new casework strategy for dealing with the range of investigations and enforcement activity it carries out to resolve complaints, disputes and company failures.

Ofwat is planning to focus its resources for casework on pursuing high impact cases that effectively target the most serious consumer harm and detriment – for example, using its licence enforcement powers and powers under the Competition Act 1998 and Enterprise Act 2002. The regulator will seek to minimise as far as possible the resources it uses on individual, smaller-value cases that can be resolved through other means on the basis that overall this could result in less consumer harm and detriment.

To support the strategy, Ofwat intends to focus on delivering six priorities as follows:

1. Being clear on our policies - Ofwat will ensure that all its policies are clear to the companies it regulates and other stakeholders. It will also make sure the policies are efficient, effective and remain appropriate in the light of developments in the sector.

2. Effectively identifying risks and opportunities – Ofwat says it will identify the areas that present the greatest risks and opportunities in order to deliver the most beneficial outcomes to customers.

3. Deciding whether settling cases or investigating them will deliver the best results - In deciding to open a case, Ofwat will use a risk-based approach. This will determine whether it is in the best interests of customers, the environment and wider society either to make an official agreement with parties to resolve a complaint, dispute or company failure or continue an investigation and make a decision on a case.

4. Improving our processes and procedures – Ofwat says it must focus on the cases that can deliver the biggest overall benefits to customers, the environment and wider society, reach timely and effective decisions and minimise overall resources used on individual cases. Processes and procedures will be constantly reviewed to ensure cases are sorted, chosen, dealt with and concluded as efficiently and effectively as possible.

5. Communicating clearly and effectively – Ofwat will maintain a constant dialogue with water companies and other stakeholders. As a starting point it will publish a regular casework bulletin to provide updates to all stakeholders.

6. Resolving issues before they become cases - Ofwat will carry out work to try and resolve issues before they become cases. This includes challenging the sector to choose to act in the best interests of customers, rather than requiring them to do so through regulatory action.

Next steps to include guidance on competition

Ofwat published the first of its ‘On the Case’ casework bulletins to provide updates on its work in June 2015 and will publish futher bulletins every three months. The regulator is also planning to publish guidance on its approach to settlement of cases by the end of 2015. Historically, settlement is not an approach Ofwat has pursued in a structured way – although settlements have been reached for individual cases.

Ofwat also intends to publish guidance by the end of 2015 on service standards for cases, including indicative timeframes for the types of cases which it most usually handles. The guidance will also set out the roles and Ofwat’s expectations for water companies and other parties. The regulator is also working on transferring some of the non-strategic cases to a third party for adjudication, subject to cost-benefit analysis and the commencement of the relevant parts of the Water Act

Ofwat says it will also publish guidance for the water sector on competition law and the challenges of the new non-household retail market in particular by the end of March 2016. The regulator said the opening of the market that will allow all non-household customers in England to choose their supplier of water and wastewater retail services is one of the biggest challenges facing the sector.

Ofwat commented:

“We must make sure that monopoly companies understand their responsibilities under competition law to ensure that new businesses seeking to provide services (‘new entrants’) are able to compete fairly. Without this, customers’ choices may be restricted and the benefits of competition lessened.”