Asked by: Lord Oxburgh (Crossbench - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask Her Majesty’s Government what assessment they have made of the risk of cross-subsidy issues in the deregulated water marketplace that would make the market unfair for new entrants.
Answered by Lord Gardiner of Kimble
The Government is committed to ensuring that there is a level playing field in the new retail market in order to make it attractive for new entrants and deliver the best deals for customers. The Water Act 2014 included provisions prohibiting discrimination between a wholesale water appointee and its retail arm; cross-subsidy would normally be seen as a form of discrimination.
Parties within the Open Water programme (the cross-sector programme responsible for implementing the new market for non-household retail services) are using a number of tools to ensure a fair and level playing field for all market participants.
Ofwat has set separate price caps for household and non-household customers and for wholesale and retail services in the 2014 Price Review. This stops cross-subsidy between household and non-household customers and between the wholesale and retail parts of companies’ businesses.
Ofwat is also proposing licence conditions for new retail licensees that prohibit discrimination and cross-subsidy. These will mirror conditions that already exist in the licences of water and sewerage undertakers.
Open Water Markets Ltd (the body currently representing all market participants) has developed detailed rules or ‘codes’ that require all interactions within the market between wholesalers and retailers to follow a common approach. This is designed to ensure a level playing field, principally on non-price issues.
Underpinning these new arrangements there is also an existing framework of competition law at both a UK and European level which prohibits discrimination by an incumbent in favour of one retailer over another, for example by offering preferential terms or prices or engaging in other anti-competitive behaviour. Ofwat has powers to investigate and fine companies up to 10% of their revenues where it finds such activity has occurred.
Asked by: Lord Oxburgh (Crossbench - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask Her Majesty’s Government what is the estimated number of new entrants expected in the deregulated water marketplace.
Answered by Lord Gardiner of Kimble
We expect the number of new entrants in the expanded Anglo-Scottish market for non-household retail services to grow over time ahead of the extension of choice to all non-household customers in English in April 2017.
At this point it is not possible to give a definitive number of new entrants likely to be in the market in April 2017. However, there are currently 12 new entrant companies who are licensed to operate in the existing retail market in England and there are 18 licensed providers in the Scottish retail market. Eight of these companies are currently licensed in both jurisdictions.
There are 18 water and sewerage undertakers some of whom have already established separate retail companies and all of which will have the opportunity to exit from the non-household retail market at market opening which may also increase the number of entrants to the market.
The Open Water Programme, involving Government, Industry and Ofwat, is preparing for market opening and is in contact with a number of additional businesses that are considering entering the market. These prospective retailers are playing an important role in helping to shape delivery of the programme and ensure a level playing field for all participants in the market.
Asked by: Lord Oxburgh (Crossbench - Life peer)
Question to the Department for Environment, Food and Rural Affairs:
To ask Her Majesty’s Government what assessment they have made of whether Ofwat is adequately protecting customer data by ensuring that access to water meter data is compliant with regulations and best practice regarding access to personal data.
Answered by Lord Gardiner of Kimble
Water companies must comply with the Data Protection Act 1988 in all aspects of their businesses, including handling data from meters.
Water UK, through its Revenue Metering Network, provides the opportunity for companies to share best practice and expertise on different approaches to metering. Each water company is responsible for ensuring that its approach is compliant with all legal and regulatory requirements.