Investigation into whether Thames Water is contravening the Wholesale Retail Code
| Date | 27 July 2020 |
In June 2019, Ofwat began investigating certain contractual credit terms that Thames Water applies to retailers operating in the business retail market in the area covered by Thames Water’s licence. The issue initially formed part of a wider investigation under the Competition Act 1998 (“CA98”) into whether Thames Water was breaching the Chapter II prohibition (abuse of a dominant position). However, in June 2020 we concluded that the CA98 was no longer the most appropriate tool to use to investigate the issue. We instead opened an investigation under the Water Industry Act 1991 into whether terms relating to the £25,000 credit limit that Thames Water had set for non-primary services contravened the requirements of the Wholesale Retail Code. Thames Water addressed the concerns that our investigation identified and in November 2020 we decided to close our investigation.
Summary of Ofwat’s final decision to close the caseOur investigation found that certain of the terms and conditions that Thames Water applied to the provision of non-primary services were inconsistent with the requirements of the business retail market’s standard Wholesale Contract (the contract that applies between wholesalers and each of the retailers providing services to non-household customers in their areas), and with the requirements of the Business Terms of the Wholesale Retail Code. Specifically, we concluded that:
- Terms that Thames Water included in its Wholesale Tariff Document (parts of which form part of the Wholesale Contract) that enabled it to invoice retailers as soon as they had incurred more than £25,000 of non-primary service charges within a month and which required payment within three Business Days, were contrary to the requirements of Section 9.4 of the Business Terms (Payment of Non-Primary Charges). Section 9.4 explicitly states that invoices for non-primary services shall be issued monthly and that payment should be made by the later of (a) 30 days after the end of the month to which the invoice relates, or (b) 15 days after the date that the invoice is received.
- Terms that Thames Water included in its Wholesale Tariff Document that enabled it to suspend the provision of non-primary services when invoices are not paid do not form part of the Wholesale Contract and are not provided for under the Wholesale Retail Code. The market’s Business Terms instead provide for the termination of a Wholesale Contract, until which the wholesaler must supply...
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