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Water Supply: Competition

Question for Department for Environment, Food and Rural Affairs

UIN HL11123, tabled on 7 December 2020

To ask Her Majesty's Government what plans Ofwat has to review its market codes to encourage more companies to switch retailers in the coming year.

Answered on

21 December 2020

Since the business retail market opened in 2017, customer awareness and engagement has increased. In 2019/20, 58% of business customers (and 96% of large business customers) were aware that they can choose their retailer, up from 53% in 2018/19 and 48% in 2017/18. The annual rate of switching and/or re-negotiating remains at around 4%. Market Codes help to govern and underpin the business retail market. However, it is the responsibility of retailers to promote their services to encourage switching.

Ofwat’s role is to promote competition through a well-functioning market to further the interests of customers. Since market opening, Ofwat has published annual reports on the business retail market, with a focus on benefits delivered to customers. In August 2020, Ofwat also published its ‘review of incumbent company support for effective markets’, which made clear that a number of market frictions continue to impede the development of effective competition and better customer outcomes and challenged industry to address these as a matter of urgency. Ofwat recognises that industry efforts to improve market functioning have accelerated, aided by collaborative leadership from the market operator (MOSL), but also highlights that resolution of market frictions continues to require urgent attention from all trading parties to build on improvements seen to date.