Becoming a water supply and sewerage licensee

The Water Act 2014 established a framework for a retail market for eligible business customers mainly in England. From April 2017, 1.2 million eligible business, charity and public sector customers in England will be able to choose their water and wastewater retailer – joining over 130,000 business customers in Scotland that are already able to switch.

These retailers hold a water supply and sewerage licence (WSSL) granted by Ofwat. Full list of WSSL holders.

Water supply and sewerage licensees have a licence from us to supply eligible business, charity and public sector customers mainly in England with retail services. As part of the licence application process we make sure that you have the financial, technical and managerial resources you need to supply services.

About water supply and sewerage licences

A WSSL allows you to use an appointed water company’s supply system to supply water and provide wastewater removal services to eligible customers.

Types of licence

Prospective licensees can apply for the following WSSL:

  • Retail authorisation (water): This is a water supply licence that authorises the holder to use the supply system of an appointed water company whose area is wholly or mainly in England to supply the eligible premises of its customers, persons associated with the licensee, or the licensee itself.
  • Restricted retail authorisation: This is a water supply licence that authorises the holder to use the supply system of an appointed water company whose area is wholly or mainly in Wales to supply the eligible premises of its customers only.
  • Retail authorisation (sewerage): This is a sewerage licence that authorises the holder to use the sewerage system of an appointed sewerage company whose area is wholly or mainly in England for the purpose of enabling the licensee to provide sewerage services in respect of the eligible premises of its customers, persons associated with the licensee, or the licensee itself.
  • Wholesale authorisation: This authorises the holder to introduce water into the public water networks of water undertakers whose areas are wholly or mainly in England in order to supply the licensee’s own customers if their non-household premises consume at least 5 megalitres of water a year.
  • Supplementary authorisation: This licence authorises the holder to introduce water into the public water networks of water undertakers whose areas are wholly or mainly in Wales in order to supply the licensee’s own customers if their non-household premises consume at least 50 megalitres of water a year.
  • Retail restricted to self-supply (water and/or sewerage) authorisation: This is a licence that authorises the holder to supply their own sites and those of persons associated with them, but would not allow them to become a retailer for any other sites.

Standard licence conditions

The standard conditions for water supply and sewerage licences were determined on 17 March 2016 by the Secretary of State, under sections 17H(1) and 17HA(1) of the Water Industry Act 1991.

Monitoring

We have a legal duty to monitor licensed suppliers’ compliance with their legal duties and licence conditions. Our monitoring activities will be proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed.

How to become a WSSL holder

The market will open in April 2017. The WSSL process will continue to run alongside the existing water supply licence (WSL) regime, until April 2017, when it will be succeeded by WSSL.

From 5 April 2016, Ofwat has been accepting applications for the WSSL. However, WSSL applicants will not be able to start trading until the new market opens.

Apply for a WSSL

Anyone can apply for a WSSL with a retail or restricted retail authorisation, as long as they can expressly demonstrate that they meet the requirements as explained in our guidance.

All retailers who wish to participate in the retail market for business customers must hold a water supply and sewerage licence(s) (WSSL) with a retail authorisation.

Licence fee

The WSSL licence fee is £5,250 per application.

The application fee reflects the costs incurred by Ofwat to undertake the necessary assessments and run the associated public consultation.

Application process

The application for process for a WSSL typically takes about 60 days. This includes a 20 working day consultation from the time an application is first received and a 40 working day assessment period conducted by Ofwat. The application process may exceed this timescale in some instances.

WSSL application process flow diagram
Water supply and sewerage licence application process.

Market entry accession certification

Ofwat is unable to grant a licence until the Market Operator confirms that an applicant has passed Market Entry Accession Certification (MEAC).

Joint applications

Applicants can also make a joint application for a licence in England and/or Wales and Scotland.

Applicants must complete the application form and submit this and the required applications to Ofwat. We will then process your application for a licence in England and/or Wales, and send on your application to the Water Industry Commission Scotland (WICS).

Similarly, applicants may make a joint application to the WICS who will send this to Ofwat.

Other parties involved in the process

In addition to Ofwat and the Market Operator there are three other parties involved in granting the WSSL licences:

Application form and guidance

To apply for a WSSL, please refer to our application guidance in the first instance. You can then download an application form and return to us once completed.

We will keep a public register of WSSLs and publish the licences on the website, as we do for our current licences.

About the market

In April 2017 eligible business, charity and public sector customers in England will be able to shop around, choose and negotiate the best the deal with water supply and wastewater removal retailers. Retail suppliers will compete for customers by offering them the best deal.

The regional water companies will continue to serve non-eligible and household customers as they do now.

You can visit the Open Water website to find out more about the business retail water market.

How the market will work

The market will work like many other open utility markets (such as telecoms, electricity and gas). WSSL licence holders will buy wholesale services, (the physical supply of water and/or removal of wastewater), and package them up with other retail services (such as metering, billing and customer service) to sell to eligible customers.

Eligible customers

For simplicity we refer to eligible customers. But it is actually individual premises that are eligible. Generally, premises are eligible where the primary use is for non-domestic purposes.

In broad terms, those eligible to switch in the new market are:

  • business customers supplied by an appointed company whose area is wholly or mainly in England
  • business customers supplied by an appointed company whose area is wholly or mainly in Wales AND using a minimum of 50 megalitres of water a year.

Customers of companies in Wales

For non-household customers who use the supply system of an appointed company whose area is wholly or mainly in Wales, the scope of the market will remain as it is at present, reflecting the policy position of the Welsh Government.

Non-household customers who use the supply system of an appointed company whose area is wholly or mainly in Wales may continue to receive their retail services from their existing water supplier. In addition, those non household customers who meet the 50Ml threshold requirement will continue to be able to choose a different supplier for water retail services.

All retailers who wish to participate in this market will have to apply for a WSSL with a restricted retail authorisation. It is not possible for a WSSL holder to provide sewerage services to customers.

Who is who in the market

  • Customers are the focus of the market. There are 1.2 million customers in England (all customers who are not households) eligible to choose their supplier of retail services. There are an additional 130,000 business customers in Scotland.
  • WSSL holders are able to compete for the custom of all eligible business customers. Suppliers buy services at wholesale from appointed water only and water and wastewater companies and new appointees.
  • Appointed water only and water and wastewater companies and new appointees own and operate the network of pipes, mains, and treatment works. They act as the wholesalers in the market, selling water and wastewater services to WSSLs.

The new business retail market is being delivered by the Open Water partners. The partners are:

  • Defra, the Department for the Environment, Food and Rural Affair, is responsible for full oversight of the framework of the market in England
  • Ofwat is responsible for implementing this framework. We are also the licensing authority for the market. In order to compete in the market, suppliers must be awarded licences by us.
  • The Market Operator (MO) will make sure the market functions in a simple and efficient way. The MO will facilitate the transfer of customer information between WSSLs. It will also calculate the money owned by each WSSL to the relevant wholesaler to Scottish Water for wholesale services.
  • WICS – The Water Industry Commission for Scotland is responsible for competition in Scotland.