In a business customer forum chaired by Ofwat, concerns were expressed about the way the market reforms proposed by the Water White Paper will be implemented.

Key reforms announced in the White Water Paper include extending choice to all non-household customers and removal of costs principle from primary legislation. The forum discussed issues arising from the Water White Paper, such as the aspects of market reform and how they could be implemented successfully.

Important issues raised at the forum included consumer protection, inconsistencies in charging schemes and conditions, ease of switching, and metering. Business customers wanted more water company transparency and engagement, rather than being simply dictated terms and costs.

Participants at the forum welcomed the removal of the costs principle from primary legislation, but were anxious about what would replace it and how the market reforms would improve competition, especially in light of the failure of previous attempts.

On the issue of consumer protection, the business representatives were keen for Small and Medium Enterprises (SMEs) to have the same protection as households. SMEs have the least ability to pressure water companies over prices, and default tariffs would give the best protection.

Furthermore, it was suggested that there should be standard terms for supply contracts to business customers, especially SMEs, in addition to the proposed standard contracts between retailers and wholesalers.

There were particular concerns around how easy it would be to switch. Forum participants pointed to the requirements for customers to make forward payments, sometimes as much as a year’s worth of supply, which would be unaffordable for many. Also, there were issues about suppliers’ contract terms and conditions, some of which are “poor and not good enough to sign up to.”

Back-billing problems were mentioned when the discussion turned to metering as examples of customers being back-billed for 6 years were brought up. The report states that “The behaviour of some water companies is cause for concern…while Ofwat has been looking at back-billing issues as part of consumer protection work.”

Ofwat believes that its Future Price Limits framework paper is “in harmony” with the Water White Paper, and is currently planning what may be needed for the introduction of choice and competition.

Ofwat has outlined the next steps in working with Defra to implement the paper:

• a high-level stakeholder meeting led by Defra;
• a series of meetings from autumn 2012 through 2013; and
• Consumer Protection engagement in autumn 2012.

The water regulator is also preparing a report on non-household customers. The report will cover the themes of water for growth, the opportunities that choice and competition can bring, what do non-household customers want, and conclusions and next steps on the introduction of choice. It will be published in the coming months.