PN 14/21: Thames Water offers to address competition concerns over smart meter roll out

Following complaints and an investigation opened by Ofwat, Thames Water has offered formal commitments under the Competition Act 1998, which look to address concerns over the company’s approach to rolling out its smart metering programme in the non-household market.

Ofwat was concerned Thames Water unfairly removed or limited access to water consumption data used by retailers and third parties – key information for detecting leaks, ensuring water efficiency and the accuracy of bills.

Ofwat investigated Thames Water following complaints that it had:

  • installed smart meters that were incompatible with data logging devices used by retailers and third-party providers;
  • removed other parties’ data logging devices when replacing meters with new digital smart meters; and
  • failed to offer access to data from its smart meters to retailers and third-party providers on fair, reasonable and non-discriminatory terms.

Monopoly providers, such as Thames Water, have a responsibility to ensure that their actions do not harm competition in active markets.

Where it had installed smart meters, Thames Water had effectively withdrawn direct access to its meters and failed to provide a suitable alternative to getting the water consumption data they provide. Retailers and third-party providers need that data to provide their own services to customers. Ofwat has concerns that this has the potential to negatively impact competition and the benefits for customers and the environment.

To address these competition concerns, Thames Water is proposing commitments to introduce technology which allows its smart meters to have logging equipment attached to them and will ensure that the data services it provides to retailers and third-party providers are done so on fair, reasonable and non-discriminatory terms.

It has stopped proactively replacing meters that have logging equipment attached until this technology is introduced.

Thames Water also proposes commitments to make improvements to how it engages with retailers and third-party providers to better understand and respond to their needs; and to ensure it fully considers its impacts on markets when making decisions.

Ofwat considers that, when fully implemented, these commitments will address the concerns it identified and proposes to accept them.

Ofwat is now consulting on the commitments proposed by Thames Water before making its final decision. If Ofwat decides to accept the commitments Thames Water will have to report to Ofwat on their implementation.

Emma Kelso, Senior Director of Markets and Enforcement said:

“We’re pleased to see Thames recognising the need to address our competition concerns to ensure it plays its part in making sure markets work effectively. And, as the sector expands its smart meter programmes, it is important that all companies are mindful of the dominant position they hold in the market and how their actions can affect markets, customers and other providers.”

ENDS

Notes to editors

  1. Thames Water commitments consultation
  2. In June 2019, Ofwat opened an investigation using its powers under the Competition Act 1998 into the approach to smart metering adopted by Thames Water Utilities Limited (Thames Water) and the effect that this was having on third parties’ access to water consumption data.
  3. We had concerns that Thames Water was breaching the Chapter II prohibition, which prohibits conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market within the United Kingdom.
  4. Water consumption data is an essential input into some of the value-added services that retailers and third-party providers offer to non-household customers, including leakage detection, water efficiency and bill checking services.
  5. Ofwat is proposing to accept the commitments offered by Thames Water. Accepting the commitments would result in the closure of our investigation, with no decision being made on whether the Chapter II prohibition has been infringed by Thames Water.
  6. Interested parties have four weeks to comment on our proposal to accept the commitments, after which we will take a final decision as to whether it is appropriate to do so.