Ofwat consults on changes to business retail price caps

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Water regulator Ofwat is opening a six-week consultation on proposed changes to the retail price caps that apply to smaller business customers (consuming less than 0.5Ml per year) who have not engaged in the market.

When Ofwat last reviewed these price caps in 2018/19 it committed to another review in 2-3 years’ time.

The new proposals are set to simplify the price caps applying to smaller business customers by moving from the existing model of price caps varying on a regional basis, to an England-wide national price cap.

This will lead to price caps in some regions of England increasing, whilst in other regions price caps will decrease.

Georgina Mills, Business Retail Market Director at Ofwat, commented: “This is the first time we have done a thorough review of retail costs to serve smaller business customers.

“Competition is working less well for smaller business customers, so our proposals aim to protect these customers whilst supporting a sustainable market where efficient retailers can earn a fair return.”

On average, across all regions in England, the changes that Ofwat propose will lead to final bills for business customers on a dual (water and wastewater) metered tariff increasing by around 0.1%, before inflation.

To help manage the impact on both retailers and business customers, Ofwat proposes to set glidepaths that aim to limit annual movements in bills (upwards or downwards) to around 5%, before inflation.

The consultation will be open for responses until 5pm Friday 14th October 2022.

More information about this consultation and how to take part is available on the Ofwat website.