Ofwat price determinations case
First published by Author on May 06, 2020 in the following categories: Consumer Law Industry Investigations Latest Pricing and tagged with cma | competition law | consumer law | investigations | pricing | utilities
The Ofwat price determinations case follows a referral by four major water companies in the UK in relation to price controls that are set to go into effect for the next five years.
Price controls for the water market are put in place for the protection of the consumer. They can ensure that water is affordable and available to all, but the controls must account for the fact that private companies are providing water services and competing in the market.
If new price controls are rejected by any of the UK water companies, the matter can be referred to the Competition and Markets Authority (CMA). The CMA can make its own separate determination as a regulator with similar duties to Ofwat.
Background of the Ofwat price determinations case
The Ofwat price determinations case is about the price controls that are put in place by the Water Services Regulation Authority, or Ofwat as they’re known for in short.
Ofwat will set price restrictions to ensure that consumers are able to access water services at reasonable prices, and they have regular intervals of when controls are set. The most recent price controls were set in December 2019 and are to be in place for the next five years.
Of course, there must be the right balance between ensuring prices are reasonable and ensuring that the water companies can provide a high-quality service. As such, water companies can make referrals to the CMA who will also be able to produce their own conclusions as to the effectiveness of the price controls in place.
It’s all about upholding consumer rights. At the same time, competition law that allows private businesses to be able to effectively compete must not be hindered either. The process of the CMA’s review and conclusions for Ofwat’s price controls is, therefore, incredibly important for us all. We all need and use water.
Rejections of the price controls
The CMA’s Ofwat price determinations case has arisen because there have been four rejections to the controls that are to be put in place.
The four companies that have rejected the controls are as follows:
- Anglian Water;
- Bristol Water;
- Northumbrian Water;
- Yorkshire Water.
As such, the CMA must now make a redetermination of the initial price controls. This may lead to the CMA agreeing with the original price controls or a conclusion that changes need to be made.
Next stages of the case
The brief outline in terms of what’s coming next for the CMA’s Ofwat price determinations case is as follows:
- Invitation for comments by 11th May 2020;
- Thereafter, submissions and replies from the companies involved with a provisional determination to be made toward the end of the year. There will be further analysis thereafter as well;
- Target for a final determination in November / December 2020;
- The statutory deadline is set as 18th March 2021.