Study of New Appointments and Variations (NAV) Market

Introduction The vast majority of residential and business customers in England and Wales obtain their water and wastewater services from one of the regional monopoly Water and Sewerage Companies (WASCs) or Water only Companies (WOCs).

While Ofwat has developed a regulatory approach to introduce a degree of "comparative" competition between companies, direct competition has been limited to date.

Study objectives The study will involve a comprehensive examination of the NAV market to see if it is working for customers and consumers generally; to identify any areas that may require attention; and to identify potential options on how we might make the market work better.

In particular, the study will: • Investigate how the NAV market is working and what it has delivered to date. • Consider the role that NAVs play within the sector - and how this might be affected by the changes to the wider competitive and regulatory landscape. • Investigate whether there are any features of the market which may be having the effect of preventing, restricting or distorting competition. • Benchmark the NAV regime against comparative arrangements in other utility sectors. • Set out options for addressing any issues or concerns identified and the extent to which current and planned initiatives and policy developments are capable of addressing any issues highlighted.

In addition, the study should also: • Inform the development of policy areas we already planned to look at e.g. in relation to NAV-specific bulk supply pricing, NAVs setting wholesale charges. • To highlight learning for the introduction of competition within the sector more generally.

Key Outputs and Deliverables Interim report and identification of options to address any issues highlighted.

Draft report A draft report should be produced my mid-March 2017.

Earlier versions can be shared and discussed prior to this.

We may request that the draft report be presented to a group of Ofwat colleagues.

Final Report A final report should be produced no later than end March 2017.

This should be in a form that can be published.