The Implication Of Ofwat’s Latest Announcement On The Impact Of Covid-19 On The Business Water Market

Castle Water CEO John Reynolds sets out the implication of Ofwat’s latest announcement on the impact of Covid-19 on the business water market

Ofwat published an updated statement on 28 January setting out Covid-19 measures for the Non-Household water market.

• During the current lockdown Ofwat will not be repeating the measure it took during last March – July, which allowed us to mark premises temporarily vacant to reflect sudden and unexpected reductions in consumption.
• Ofwat has published guidance for customers on its website, including encouraging customers to share meter reads with water retailers.
• If you are unable to take a meter read, Ofwat says “we would encourage customers to contact their retailer to explain what activities (if any) are ongoing at a site. This information should help a retailer calculate a more accurate estimate of consumption”.
• If customer bad debt across the market is likely to exceed 2% of turnover, Ofwat will provide regulatory protections for a portion of this – we expect this to in part be via a small increase in tariffs. The details of this have not yet been announced, and I will keep you in touch when Ofwat publishes any detail. At the moment, as a preliminary estimate I would expect this to increase tariffs by around 1-2%
• Retailers, including Castle Water, are expected to stay in contact with customers on repayment plans to understand their circumstances and tailor collection activity appropriately.

Read Ofwat’s information for customers on Covid-19

Castle Water played a major part in convincing Ofwat to take the measures that allowed us to provide rebates for periods when you were required to close during the lockdown – without our influence, this would not have happened. This has resulted in tens of thousands of our customers receiving credits to their accounts – some have taken this as a cash refund. We have already started using the approach Ofwat is now outlining – capping estimates – (we’ve been proactively doing this since the first lockdown), and have now extended it significantly to actively reduce charges to reflect reduced business activity where we are unable to take meter readings. For example, where we have been able to take meter readings from some customers in a specific sector, such as pubs, we have been able to apply reductions across other customers we can identify with similar businesses. We have not been able to apply this to every customer, so if we have been unable to take recent meter readings (we took 40,000 per month from July to December, but can’t during the lockdown) and your bill is over-estimated, please contact us and we can review the estimates.

The best way of ensuring your bills are accurate is to provide regular meter readings. If you have reduced activity, we need two meter readings one month apart in order to ensure we understand your current water consumption. Customers on assessed tariffs should complete a reassessment application form, which we can submit to the relevant wholesaler. Unfortunately, this will not benefit customers on “unmeasured” tariffs, and we have written to the CEO of Ofwat asking her to review these as we believe these now to be unfair – Castle Water has no realistic scope to vary these unilaterally.

You should also note that most customers will see a tariff increase of approximately 5% from 1 April, based on an increase in wholesale charges.