Ofwat has said that the water companies must publish their indicative wholesale access charges for 2017-18 by October 2016 to facilitate a level playing field in the non-household retail market before it opens in 2017.
The water sector regulator has set out the details of the information required from water companies whose areas are wholly or mainly in England.
Wholesale access charges are the charges that new retailers, including new entrants and sister companies of existing water companies, will have to pay the water companies in return for the provision of bundled wholesale water and wastewater services to support retail service provision.
Introducing the requirements, Ofwat said:
“These charges represent a substantial component in the charges faced by end users (customers) and are key to ensuring an effective non-household retail market.”
The regulator has set separate binding price controls for wholesale services, household retail services and non-household retail services for the 18 largest water companies for the AMP6 period 2015-20.
While Ofwat intends to set wholesale access charging rules before market opening, the process it has to follow still means that the rules will not be set early enough in 2016 to ensure that the information is available to retailers at an appropriate time.
Ofwat said publication of the information by October 2016 would allow retailers sufficient time to develop their retail pricing proposals ahead of the beginning of the charging year 2017-18. It would also provide an opportunity for any changes to wholesale access charges to be reflected in central systems handled by the market operator.
The regulator encountered what it described as “widespread resistance” to its September 2015 proposal that indicative wholesale access charges be published in July and October.
However, this latest information notice confirms that it expects the water companies to publish indicative wholesale access charges for 2017-18 in October 2016 and also to provide assurance that the charges are the charges the companies expect to set for 2017-18.
Ofwat also expects them to notify stakeholders in July 2016 if they anticipate significant changes to their wholesale access charging structures in 2017-18 , together with details of what the changes might be.
The regulator has said the water companies can provide the information on indicative wholesale access pricing “in any format suitable to ensure transparency.”
Click here to download Information requirement on publication of indicative wholesale access charges for 2017-18
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