Castle Water held the first dedicated helpdesk for sub-meter customers on 15 June. The level of interest, and the complexity of queries, highlighted shortcomings in the non-household water market for many customers with sub-meters.

Castle Water’s CEO, John Reynolds, has written to Ofwat, MOSL, CCWater and the Strategic Panel, explaining the problems faced by sub-meter customers in the non-household water market, and asked for them to prioritise reform to the market arrangements.

In the letter to Ofwat, MOSL, CCWater and the Strategic Panel, John Reynolds said:

"I wanted to highlight the extent of shortcomings with regard to customers with sub-meters, and ask for Ofwat, MOSL, CCW and the Strategic Panel to prioritise resolution, given the impact this is having on thousands of customers.

Castle Water held a dedicated helpdesk event on 15 June at Friends House in London, supported by major water wholesalers including Thames Water, Affinity Water and South East Water, to resolve longstanding issues faced by customers. Castle Water believes that this is the first such event held anywhere in the country specifically for sub-meter customers. The interest in the event was among the largest number Castle Water has had for any helpdesk event.

When the non-household water market opened in 2017, it was accepted that it needed further development in some specific cases where market arrangements did not cater for specific groups of customers. One major group disadvantaged by the market is customers with sub-meters or private meter networks. In two thirds of cases where Castle Water is the retailer for customers with sub-meters, Castle Water is unable to enter meter reads into CMOS.

Many sub-meters appear to be not read, and meter readings are rarely entered into CMOS. There is no direct linkage of consumption, only of meter numbers. As a result, when a read is eventually received, customers could receive unexpected high bills. This is a particular risk with sub-meters due to the complex and illogical way they are treated in the Central Market Operating system (CMOS): where sub-meters are not read, a rarely used and high basis of estimate is used, which results in under-estimating charges for the main meter. Wholesalers are not calculating the normally used Yearly Volume Estimates (YVEs) which set usage based on expected consumption (we have asked Wholesalers and MOSL whether there is functionality for wholesalers to set YVEs, but have not had any clear answer).

As a result, sub-meters are often defaulting to using the different and much higher estimate, the ILE (Industry Level Estimate) – these are highly contentious estimates, which Castle Water believes to function in part as revenue-protection for water networks. This results in very high estimated usage for sub-meters – since the non-household customer receives a bill based on their own meter usage minus sub-meter usage, the ILE results in an unusually high and incorrect deduction, and systemically under-estimated overall charges. Catch-up bills could run into hundreds and in some cases thousands.

The water retailer is not able to submit meter readings to CMOS in respect of most sub-meters – these generally have to be entered by the wholesaler. Wholesalers may not read meters on the same timescales as the retailer, and in some cases customers may not be aware that there are sub-meters to be incorporated into billing. Customers, quite reasonably, tend to be unaware that one meter is “market” and another “non-market” and have difficulty understanding why a retailer is unable to upload meter readings into CMOS.

Many customers have taken over properties after metering arrangements were put in place, and are unaware that some meters are “non-market”. There is no process or system available in the market for non-household customers to provide sub-meter readings to wholesalers, or for retailers to provide readings to wholesalers, resulting in inconsistent and inaccurate billing.

Castle Water works proactively with wholesalers including Thames Water, South East Water and Affinity Water to resolve individual issues, but this is intensive and not an acceptable alternative to a proper settlement mechanism."

Castle Water has looked at the Ofwat, MOSL and CCWater websites, and found none has any guidance for sub-meter customers.