MOSL has published its response to Ofwat’s draft methodology for the 2024 price review (PR24) which will inform the funding and incentives for wholesalers during the 2025-30 period.

Due to the timing of the opening of the non-household (NHH) water market in 2017, PR24 is effectively the first price review that can consider what is needed to ensure a sustainable, flourishing market that delivers for trading parties, customers and the environment.

MOSL CEO Sarah McMath said: “While there are a number of positives for the NHH market in the draft methodology, we remain concerned that the PR24 process is not yet giving sufficient priority to increasing wholesalers’ focus on the NHH market and improving outcomes for its customers.”

MOSL’s full response can be found here. The three key messages to Ofwat are:

  1. MOSL believes more work is needed to establish the business case for the proposed BR-MeX (business customer and retailer measure of experience) incentive, and the value it could deliver to the market compared to using separate metrics
  2. MOSL recommends developing an enhanced metering strategy that encompasses both household and NHH customers and takes into account the benefits from a national, rather than regional, perspective (e.g., improvements in data quality, the benefits of a more detailed picture of customers’ water consumption, identification of leakage)
  3. We welcome the proposal to include business demand reductions in the proposed performance commitments for the first time. The final methodology must ensure an appropriate focus on reducing both non-household and household demand. If the largest non-household customers are excluded from this metric (as proposed), it must still include a targeted incentive for customers to reduce their demand or move to more sustainable water usage.

Ofwat’s focus has been on three key market frictions to date: the quality of market data, the management of retailer-wholesaler (bilateral) transactions and wholesaler performance.

Sarah McMath added: “We have been pleased to work with Ofwat on these issues and to have made considerable progress. However, our view, which is supported by the market health report last year, is that the market still has fundamental issues which won’t be solved by tackling market frictions alone, for example, retailer margins.”

MOSL’s understanding is that retailer margins will be addressed as part of the Retail Exit Code (REC) review. If this is not the case, Ofwat will need to consider how PR24 could be used to provide the financial headroom retailers need to ensure they can continue to deliver for NHH customers and the environment.

If you have any questions on the response, please email This email address is being protected from spambots. You need JavaScript enabled to view it.

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