Assessment of the key issues arising from Ofwat’s Retail Exit Code consultation

28 Nov 2022

In order to provide an independent assessment of the key issues arising from Ofwat’s REC consultation, Economic Insight was commissioned by MOSL, the market operator for the non-household retail market in England.  Our report, which has now been published, set out (i) our overarching observations regarding the proposals under the REC consultation; (ii) a comparison of the NHH costs allowed under Ofwat’s proposals, relative to our prior analysis of actual costs incurred in the business retail market; and (iii) our observations regarding specific elements of Ofwat’s methodology under the REC consultation.  In summary, we are concerned that, under Ofwat’s proposals, NHH retailers will not be able to recover efficiently incurred costs (and that this problem may be especially acute for Group One customers) meaning that the scope for NHH retailers to earn sustainable returns will remain limited, as will the scope for competition to develop for smaller customers in the business retail market.

Our full report can be accessed here:

https://mosl.co.uk/news-and-events/news/publications/mosl-responds-to-ofwat-s-retail-exit-code-rec-review-proposals

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