The coronavirus pandemic is resulting in some business customers not being able to pay their bills on time, which will consequentially affect the ability of business retailers to pay wholesalers on time. As signalled in the joint communication from Ofwat and MOSL on 19 March 2020, we are progressing urgent code modifications to waive performance charges and to ensure short term estimation better reflects less water being used by business customers. We expect these to provide some relief, but are aware that further action is also likely to be required to reflect the risks posed by late paying customers and potentially increases in levels of bad debt.
To address the issue of late customer payments, we are currently minded to make an urgent code modification, which will be implemented in time for the settlement runs that take place in early April (and possibly also apply to those taking place in early May). In parallel, we will progress a code change that will provide a more enduring solution to late payment terms for the period of the coronavirus pandemic.
Current high level options that we are considering are as follows:
- extending the current payment terms set out in the wholesale retail code;
- waiving a percentage of settlement charges; and
- an approach that reflects what customers pay (which could also include a mechanism to appropriately share the cost of late payment).
To inform the development of these code modification we request responses from stakeholders by midday, Wednesday 25 March. These can be emailed to [email protected]