Ofwat is currently consulting on water charges for businesses affected by Covid-19, with a consultation Covid-19 and the business retail market – consultation on next steps due to close on 16 July. As some changes may be implemented relatively shortly after the consultation closes, it is important that non-household water customers understand the impact of Ofwat’s proposals. We will provide more information when Ofwat concludes the consultation, which is due on 30 July.
Ofwat has allowed customers who temporarily closed to be exempt from water charges during the closure, through use of a “temporary vacant flag” in the central water market systems. In the consultation, Ofwat states:
protecting customers does not equate to preventing individual Retailers from exiting the market, as supplier exit is a feature of any functioning market. Nor does it mean absolving business customers of their requirement to pay for services they have knowingly and legitimately consumed in the operation of their business
The temporary vacant flag….. is no longer appropriate
we propose to allow the option to apply the temporary vacancy flag to expire at the end of July 2020.
Ofwat is also considering measures to penalise Retailers if they fail to identify correctly a customer's consumption:
we are considering whether a new Market Performance Standard (‘MPS’) should be introduced that would incentivise Retailers by applying a charge for every Supply Point Identifier (‘SPID’) that remains flagged as temporary vacant beyond the end of September 2020.
Although the consultation is complex and not yet complete, we believe that the consultation makes it clear that if you temporarily closed during the lockdown:
3.1.4 A premises is considered to be a Vacant Premises if all of the following criteria are met:
(a) there is no physical occupation by any person, for any purpose, other than for the sole purpose of providing security services for the premises, for example as a security guard;
(b) the premises is not open or available to the public or visitors;
(c) there is no stock left in the premises, except where these items have been abandoned by a former tenant and the premises is not in use;
(d) there are no moveable items left on the premises such as furniture, equipment tools or moveable equipment or machinery;
and (e) any fixtures and fittings have been abandoned by a former tenant and the premises is not in use.
The full consultation can be found here
All retailers are also required to follow a guidance document published by MOSL, the Market Operator. This requires retailers to take into account evidence from water Wholesalers (eg Thames Water, United Utilities) if it indicates that premises were occupied during the lockdown:
Wholesalers may well have easier access to better evidence on actual consumption at particular supply points than is currently reasonably available to Retailers. This could include for example data from: Wholesaler field visits; AMR reads; smart meters; and dataloggers. Retailers are expected to use this evidence in a timely way to remove Vacancy flags or restore Yearly Volume Estimates necessary. Retailers should also use this evidence alongside their own evidence, in reviewing and updating Vacancy flags and YVEs for similar customers if appropriate.
The impact of this is that even if you have informed us of a temporary closure, we may be required by Ofwat to charge you for water services, if the Wholesaler has provided evidence which in its opinion indicates you were not closed.