Opening the expanded business retail market required new systems, licences, rules and processes to enable eligible business and other non-household customers to engage with the market, and for new retailers to enter the market. These licences, rules and processes are contained in the various Market Codes which have been developed as part of the new legal and regulatory framework. These Market Codes, that help to govern and underpin the business retail market, are discussed further below.
Market Arrangements Code
The Market Arrangements Code (MAC) is a non-statutory code issued by Ofwat pursuant to conditions in Water and Sewerage Supply Licences and Instruments of Appointment. The MAC condition, and therefore the MAC itself came into force on 1 April 2017. Amongst other things, the MAC sets up arrangements for how the business retail market operates, including the setting up of a panel to help oversee the codes and any changes to these, and the appointment and operation of a Market Operator.
The latest version of the MAC can be found on the Market Operator’s website.
Wholesale Retail Code
The Wholesale Retail Code (WRC) is a statutory code that sets out the relationship between Wholesalers and Retailers, and how the market will operate. The Wholesale Contract between wholesalers and retailers is also incorporated into the structure of the WRC, so that essentially the WRC is the Wholesale Contract.
The latest version of the WRC can be found on the Market Operator’s website.
Retail Exit Code
The Water Act 2014 allowed Defra to make regulations to provide for retail exit – that is, for an appointed company to transfer all of its non-household customers to one or more WSSL retailers. The Exit Regulations require any WSSL licensee who acquired customers via a Retail Exit to make and keep under review a scheme setting out the terms and conditions that will apply in all cases where Retail Exit has occurred and affected customers have not otherwise negotiated a contract.
The Exit Regulations also requires Ofwat to issue a code setting out the basis for such schemes of terms and conditions.
In November 2017, we opened a consultation to propose making changes to the REC to remove a regulatory obstacle so as to enable bulk transfers of customers between Water Supply and / or Sewerage Supply licensees in certain circumstances. It also separately included a proposal to change the definition of Permitted Adjustment, which in its current form, may be considered ambiguous. The final REC consultation decision document can be found here.
Interim Supply Code
In certain circumstances, a WSSL licensee may cease to supply its customers in the new market, for example as a result of insolvency. To deal with these circumstances, Ofwat is required to issue a code which provides for the arrangements necessary to ensure continuity of affected customers’ retail services and appropriate protections for customers and other market participants. These are referred to as the “interim supply arrangements”. More infomation about interim supply is available here.
Ofwat published a final version of the Interim Supply Code in March 2017, which was updated in September 2020.
Customer Protection Code of Practice
Ofwat has a legal duty to make sure that eligible customers are protected in the new market. To help achieve this, we have published a Customer Protection Code of Practice (CPCoP) for market opening. The CPCoP sets out the minimum standards that all retailers must comply with in their dealings with customers. It also sets out the minimum standards of behaviour that we expect from retailers at every step of the customer’s use of services (the ‘customer journey’). That includes:
- sales and marketing activities;
- contracts and information;
- switching suppliers;
- billing and data; and
- handling complaints and disputes.
For further information on customer protection, please see our customer protection page.
Ofwat has the power to approve or reject code modifications. Recommendations to approve or reject code modifications are made by the panel, which is made up of elected members from wholesalers and retailers, plus three independent members appointed by Market Operating Services Limited (MOSL).
For a list of the decisions made to date please visit our code modifications page.