There are a range of benefits that self-supplying may bring to business customers who decide self-supply is the most suitable option for them in the business retail market. These benefits include:
- potential cost savings (in that self-suppliers pay the wholesaler directly and therefore do not pay the margin a retailer may add to the wholesale charges. Savings could also be made through reduced admin costs and consolidated billing);
- acquiring certain rights within the business retail market arrangements (including membership and voting rights in the running of the Market Operator Services Limited (MOSL); and
- the ability to fully manage its own usage and data
Self-suppliers will not be provided with retail services, such as billing, and therefore will be responsible for providing its own retail services including:
- reading its own meter or meters for the business premises;
- submitting the meter readings to the wholesaler; and
- engaging with the wholesaler when required. More information on this can be found in the market codes (see below).
Self-suppliers operating in the market are also required to:
- produce, and keep up to date, a list of associated persons and publish the most up to date list on its website;
- manage wholesale billing from the wholesaler;
- create emergency plans for water outages affecting its premises; and
- understand all relevant documentation about the business retail market, including the:
- legal and regulatory framework; and
- market codes (see below); and
- Standard Licence Conditions
There is a legal and regulatory framework in place to facilitate the business retail market, and provide the necessary market governance. This framework includes a number of codes which together set out the rules for the business retail market with each code having a different role to play in helping to govern the market. We list the most significant codes below.
The MAC is a non-statutory code which is brought into effect by conditions in WSSLs and wholesalers’ Instruments of Appointment (MAC Condition). The MAC applies to all Licensees (including those limited to self-supply) and Appointees in England and Wales as a consequence of the MAC Condition.
The WRC is a statutory code which sets out the rules (including business terms, operational terms and market terms) that apply for interactions between wholesalers and retailers. Retailers (including self-suppliers) and wholesalers in the business retail market must comply with the WRC.
The REC is made under the Water and Sewerage Undertakers (Exit from Non-household Retail Market) Regulations 2016 (Retail Exit Regulations 2016). The regulations provide for retail exit – that is, for an appointed company to exit the non-household retail market and transfer all of its business customers to one or more licensee. The area of appointment of the appointed company then becomes a Retail Exit Area. The REC requires any licensee operating in a Retail Exit Area to make and keep under review a scheme setting out the terms and conditions that will apply to all customers of the licensee in the Retail Exit Area if the customers have not otherwise negotiated a contract. The Retail Exit Regulations require Ofwat to issue a code setting out the basis for such schemes of terms and conditions and the REC has been issued in compliance with this requirement.
We consider that the supply to oneself or to associated persons will always be a supply by agreement; nonetheless, the Retail Exit Regulations do not distinguish between licensees limited to self-supply and other retailers and therefore the requirement to have a scheme of terms and conditions in a Retail Exit Area that complies with the REC applies to a WSSL limited to self-supply.
The final codes, consultations and consultation responses can all be found here.