Ofwat to let water firms to lift prices as bad debt rises in pandemic

(Alliance News) - UK water regulator Ofwat on Monday decided to let retailers lift prices ...

Alliance News 26 July, 2021 | 8:26PM
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(Alliance News) - UK water regulator Ofwat on Monday decided to let retailers lift prices following an increase in bad debt.

It confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue.

Ofwat noted that the pandemic could lead to retailers facing higher levels of customer bad debt, with their abilities to respond expected to be constrained by temporarily strengthened protections for non-household customers and price caps.

It will adjust retail exit code price caps, allowing retailers to recover a portion of market-wide excess bad debt costs via an upward adjustment to the maximum prices they are permitted to charge their customers from April 2022.

Georgina Mills, business retail market director at Ofwat, said: "These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of Covid-19."

"By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition."

Further consultation on the proposed adjustments to retail exit code price caps can be expected by December, Ofwat added.

By Lucy Heming; lucyheming@alliancenews.com

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