PN 07/17: Ofwat proposes change to retail market codes


Ofwat has today proposed changes to the retail market codes to make sure that wholesalers act in good faith in their negotiations with retailers, especially new entrants.

The proposed change to the codes follows concerns being raised that incumbents may not be approaching negotiations with new retailers in line with the codes’ principles.

To avoid this concern becoming an issue, Ofwat has acted to strengthen the requirements on wholesalers.  In future they must not only give due and proper consideration to proposals from retailers, they must also demonstrate that they are negotiating with retailers in good faith and in line with those principles. Retailers are also obliged to act in the same way.

Ofwat has also said it is considering whether further changes ought to be put forward to make sure urgent issues are dealt with in a timely way by the Panel.

Cathryn Ross, Ofwat Chief Executive, said:

“We have been crystal clear throughout the process of establishing this new market and in the first stages of its operation that we are monitoring things very closely and, if we think we need to act to protect customers or make sure competition is working for them, we will do so.

“Today, we have demonstrated we mean that. We have seen some negotiations between wholesalers and retailers, which are the bedrock of a well-functioning market, not going as smoothly as they should. We want all parties to be in no doubt about what is required of them in these negotiations and to make sure the playing field is level for all. Getting this right will help deliver better offers and outcomes for customers.”

This proposed change should support the market over the long term by helping all parties to negotiate more effectively and efficiently. The changes will be consulted on this week, with a view to the Codes Panel reporting back to Ofwat with a recommendation by 11 July. Ofwat will consider that recommendation and the views submitted in the consultation before deciding whether to approve the change.