Ofwat has launched a short consultation on its proposal for a revised application process for Water Supply and Sewerage Licences (WSSL).

The regulator said the new consultation provides all stakeholders with the opportunity to comment on the revised application form and guidance document for applications for future retail and wholesale water supply and sewerage licences.

The application form and guidance document has also been updated to include information in relation to self-supply applications. In the new market, it will also be possible for individual eligible English customers to elect to become their own retailer and self-supply with retail services. This would allow them to supply their own sites and those of persons associated with them, but would not allow them to become a retailer for any other sites. Companies that wish to apply for a self-supply licence must do so in the same way as they would apply for a standard WSSL licence, with the following differences:

• there is no requirement for an applicant for a self-supply licence to submit a certificate of adequacy; and
• an applicant for a self-supply licence must submit a list of associated persons/sites that it intends supplying if a self-supply licence is granted.

In order to enter the market, self-supply licensees will also need to make a trading application to MOSL, pass the market entry assurance tests and satisfy the industry code trading conditions.

The consultation sets out the process Ofwat will use to consider whether the applicant has the appropriate level of competency to hold the type of WSSL requested. The regulator said it will do this by assessing a number of key areas, including managerial, financial and technical competencies.

Managerial competency is described as a key element of Ofwat’s assessment criteria. In particular, the regulator will look at:

• the skills, qualifications and experience of the applicant’s staff;
• whether the applicant has adequate knowledge and understanding of the duties of licensees under the law and licence conditions;
• its systems and procedures in place for complying with those duties;
• and the overall quality of the submission.

 Applicants may also be invited to a meeting for applicants to demonstrate further their managerial competence. With regards to financial stability, Ofwat will also consider whether the applicant has sufficient financial resources to finance its obligations under the law and to deliver its business plan and whether it has the capacity to raise new funds in future.

Applicants must also be able to demonstrate that they have technical competency relating to measures expected by the Drinking Water Inspectorate, Environment Agency and /or Natural Resources Wales.

Ofwat will not formally grant a WSSL to an applicant until it has received confirmation from MOSL that the applicant has satisfactorily completed Market Entry Assurance Certification (MEAC). MEAC provides assurance that a company seeking to become a trading party within the retail market has the required systems, processes and capabilities to fulfil its market obligations. Without certification from MOSL, an applicant will not be granted a WSSL and will be unable to participate in the market.

While the WSSL application process and market entry assurance process are distinct and separate processes carried out by Ofwat and MOSL respectively, the outcomes of each process are interdependent. MOSL will not permit entry to the market entry assurance process unless an applicant has, at the very least, applied for a WSSL. Likewise, completing the MEAC is a necessary step for Ofwat’s consideration of whether to grant a WSSL.

Deadline to submit responses to the consultation on Ofwat’s intended process for applicants for the future retail market is Friday 21 October 2016. The regulator then plans to formally publish the final application form and guidance by 31 October 2016.

Potential applicants will be able to apply for a licence using the new application form and guidance document from 1 November 2016.

Click here to access the consultation online

Click here to download the draft guidance