Ofwat has written to the the Chief Executives of the water companies in England and Wales setting out the regulator’s expectations how companies should support vulnerable customers and assist retailers facing immediate cash flow constraints in the current COVID-19 coronavirus emergency.

Support for vulnerable customers

Rachel Fletcher, Chief Executive of Ofwat says in her letter that many families and individuals are now facing uncertain futures, and the number of customers in vulnerable situations or facing severe problems meeting their financial obligations can be expected to increase significantly in the coming months.

Describing this as an opportunity for the water industry to demonstrate its commitment to its public purpose, Rachel Fletcher has told the water company Chiefs:

“In the coming days and weeks I would like to see companies across the sector learning lessons from each other and seeking to drive up the standard of support to those unable to pay their bills. I would also like to see all companies consider whether they can go further to ease the financial burden on households, including by considering opportunities to increase financial assistance and by adopting suitably supportive and flexible payment and debt collections practices.”

Company obligations and regulatory flexibility

The letter acknowledges that the sector is likely to face significant staff shortages and limitations to its ability to undertake some routine work because of social distancing requirements – which might make it difficult for every company to meet some of their performance commitments.

The regulator said that in this situation and for the avoidance of doubt, “incentives and penalties in our regulatory regime should not get in the way of effective prioritisation in the interests of customers.”

Business retail market

According to Fletcher, the business retail market in England will “inevitably be impacted, both through businesses closing and as social distancing affects retailer operations.”

Ofwat has identified a number of measures to minimise the disruption on the market, its customers and the trading parties who are operating within it. “We are working very closely with MOSL on a package of initiatives, some of which will be implemented as a matter of urgency,” the letter says.

Rachel Fletcher said Ofwat expected water wholesalers to play a key role in ensuring the disruption is kept to a minimum, including adopting a "reasonable and pragmatic approach" to the collection of wholesale charges from retailers who may be facing difficulties in obtaining payment from their customers.

The regulator also expects wholesalers to consider their approach where they receive requests from retailers to disconnect customers for non-payment. “We would not expect to see customers disconnected for non-payment where the delay in payment is caused by factors relating to coronavirus,” Fletcher writes.

Before the end of the week, trading parties in the business retail market will receive further details on the action Ofwat and MOSL will take to protect customers’ interests.

The letter explains that Ofwat is also “fully involved in relevant cross-government processes” and concludes:

“Given the current pressure on companies’ operations, we will carefully consider how Ofwat can minimise that burden while continuing to deliver its regulatory functions and advance delivery of its strategy.”