Ofwat has proposed changes to the retail water market codes to ensure wholesalers act in “good faith” when negotiating with retailers.
It follows concerns raised that incumbents may not be approaching negotiations with new retailers in line with the codes’ principles.
The regulator is therefore aiming to strengthen the requirements on wholesalers.
It suggests wholesalers must “not only give due and proper consideration to proposals from retailers but also demonstrate that they are negotiating with retailers in good faith and in line with those principles”.
Retailers are also obliged to act in the same way.
Ofwat is considering whether further changes need to be put forward to make sure urgent issues are dealt with in a timely way.
Chief Executive Cathryn Ross said: “We have been crystal clear throughout the process of establishing this new market and in the first stages of its operation that we are monitoring things very closely and if we think we need to act to protect customers or make sure competition is working for them, we will do so.
“We have seen some negotiations between wholesalers and retailers, which are the bedrock of a well-functioning market, not going as smoothly as they should. We want all parties to be in no doubt about what is required of them in these negotiations and to make sure the playing field is level for all. Getting this right will help deliver better offers and outcomes for customers.”
The changes will be consulted this week, with the Codes Panel expected to report back to Ofwat with a recommendation by 11the July.