Ofwat calls for inputs on business retail market credit and collateral arrangements

Ofwat has issued a Call for Inputs to inform its review of Credit and Collateral Arrangements in the business retail market. This concerns the credit support arrangements paid by retailers to wholesalers, where they pay in arrears for wholesale services.

Ofwat said the market had matured since existing arrangements were created and there is now a better understanding of the balance or risk between wholesalers and retailers. The review is looking at matters including: risk allocation; the current selection of backstop credit options; negotiated credit support arrangements; and whether the credit options are being effectively administered.

The review proceeds against the backdrop of Castle Water’s challenge at the Competition and Markets Authority to Ofwat’s recent decision about credit support for wholesalers in financial jeopardy. Views are welcomed until 16 May. Ofwat said it would use the inputs to refine its work ahead of a more detailed consultation later this year.