Water trading incentives: Dŵr Cymru trading and procurement code

About Consultation

We can confirm that we have approved Dŵr Cymru’s trading and procurement code.

In PR14 Ofwat introduced water trading incentives to encourage water trading between incumbent water companies. Water trading can benefit:

• the environment, by allowing scarce resources to be optimised between company areas as well as within them; and
• customers, as it can allow more expensive investment in developing new resources within a company’s area to be deferred, reducing future upward pressures on bills.

Companies can only receive these water trading incentives if they produce, and are compliant with, an approved trading and procurement code. The requirements for the code are set out in Appendix 3 of our final PR14 methodology statement and as part of the approval process we publish a company’s draft code on our website for comment. Following the conclusion of this consultation period we will approve the code or provide reasons for not approving it within six weeks.

Dŵr Cymru was the first company to submit their code for approval in November 2015 and the consultation closed in January 2016. Thames Water was the only respondent to the consultation and was supportive of Dŵr Cymru’s draft code. We carefully considered this response and the code itself before making the decision to approve the code. As set out in methodology we may conduct an annual review of approved codes and provide further guidance to companies by the end of June each year.