Compliance Code under Condition R - Bristol Water · Bristol Water Compliance Code under Condition R 1 ... Associate Licensee any water, or any of its other assets until the in area

Bristol Water Compliance Code under Condition R

1

Compliance Code under Condition R

March 2016

1. ABOUT THIS CODE ........................................................................................................................................ 2

1.1 INTRODUCTION ................................................................................................................................................. 2

1.2 COMPLIANCE STATEMENT ................................................................................................................................... 2

1.3 SCOPE OF THIS CODE .......................................................................................................................................... 3

1.4 PRINCIPLES OF COMPLIANCE ................................................................................................................................ 3

2. DEALINGS WITH LICENSEES .......................................................................................................................... 4

2.1 OBLIGATIONS TOWARDS LICENSEES ....................................................................................................................... 4

2.2 REASONABLE INFORMATION FROM A LICENSEE ........................................................................................................ 4

2.3 REASONABLE INFORMATION TO A LICENSEE ............................................................................................................ 5

2.4 INFORMATION HANDLING PROCEDURE FOR INCOMING AND OUTGOING CORRESPONDENCE ............................................. 5

3. DEALINGS WITH AN ASSOCIATE LICENSEE .................................................................................................... 6

3.1 RELATIONSHIP WITH AN ASSOCIATED LICENSEE ........................................................................................................ 6

3.2 RESTRICTIONS ON DEALINGS WITH AN ASSOCIATE LICENSEE ....................................................................................... 6

4. TRAINING AND MONITORING ...................................................................................................................... 8

4.1 TRAINING ......................................................................................................................................................... 8

4.2 MONITORING AND REVIEW ................................................................................................................................. 8

4.3 BREACHES ........................................................................................................................................................ 8

4. GLOSSARY OF TERMS ................................................................................................................................. 10


2

1. About this Code

1.1 Introduction Under Condition R of Bristol Water plc’s (Bristol Water’s) Instrument of Appointment Bristol Water are required to have a Compliance Code governing our dealings with Licensed Water Suppliers (Licensees). Condition R stipulates the Code:

complies with guidance published by Ofwat;

ensures there is an Arms Length Relationship between Bristol Water and Licensees;

imposes important duties on us in our use and disclosure of information received from, or about, a Licensee;

prohibits us from showing undue preference towards or undue discrimination against: o customers or potential customers of our own; o customers or potential customers of a Licensee; and o any Licensee.

The Competition Act 1998 imposes similar obligations on Bristol Water in view of our dominant market position in our water supply areas. A Glossary of Terms is included at the end of the document.

1.2 Compliance Statement “Bristol Water welcomes competition into the supply of water services. We believe it benefits

customers and strengthens Bristol Water as a business. We have important obligations under the

conditions of our license to have a Compliance Code that will provide guidance to staff, customers,

and retail licensees and ensure that we do not show any undue preference to our retail licensee,

Water2Business and do not show any undue discrimination against other retail licensees and their

customers. Bristol Water is committed to fulfilling these obligations.

The purpose of the code is to ensure Bristol Water does not obtain an unfair commercial advantage

from the provision of information between Bristol Water and any Licensed Water Supplier we may

deal with, and that we deal with all Licensed Water Suppliers fairly and equitably.

The Code is published on our website and made available to all members of staff affected. Knowledge

of and compliance with the Code is essential and is the responsibility of everyone at all times.”

Luis Garcia Chief Executive Officer


3

1.3 Scope of this Code The purpose of this Code is to ensure that Bristol Water complies with these legal and regulatory obligations. Accordingly, it must be followed by all employees at all times. This Code sets out guidance for employees and others acting on behalf of Bristol Water who will come into possession of commercially Confidential Information in the course (or in contemplation) of the provision of a Wholesale Supply or Combined Supply to a Licensee providing services to Non-Household Customers. It covers:

wholesale supplies and combined supplies to a Licensee - Section 2; and

dealings with an Associate Licensee - Section 3.

1.4 Principles of Compliance Bristol Water staff must follow the key principles of compliance at all times. Staff must comply with the Code and must be seen to do so as well. Bristol Water and its staff must not:

abuse Bristol Water’s dominant position in the market for supply of water and waste water services in the region;

take any action or enter any agreement that would have the effect of restricting or preventing competition;

unfairly discriminate between Licensees (or their customers) and Bristol Water’s customers;

obtain an unfair commercial advantage as a result of activities under condition R of the Instrument of Appointment;

show undue preference or discrimination against any Licensee or Potential Licensees or their customers; and

treat a Licensee’s customer any different from a Bristol Water customer.

The purpose of these principles is to prevent any distinctions between:

Bristol Water’s retail activities and that or a Licensee

different Licensees or Potential Licensees; or

customers connected to our network whether supplied by Bristol Water or through a Licensee.


4

2. Dealings with Licensees

2.1 Obligations towards Licensees Bristol Water must:

ensure that all transactions with the Licensee are conducted at arm’s length;

only use the information a Licensee provides for the purpose for which it is supplied;

take steps to protect the information that it receives from misuse within the company and prevent any inappropriate disclosure to third parties;

act fairly and without discrimination between any Licensee’s customers and our own. Bristol Water must not:

obtain any unfair advantage from any exchange of information between itself and a Licensee.

request from a Licensee more information than it reasonably requires;

charge a Licensee for providing copies of documentation used to transfer a customer or clarifying its policy and information requirements;

show any preference or discrimination between any Licensee or their customers and any other.

Other than the Wholesale Services Team, Bristol Water staff must not be told of a competitive bid from a Licensee or Potential Licensee. If they become aware they must:

inform the Wholesale Services Manager and follow any advice given. Any member of Bristol Water staff in discussion with a customer must not:

comment on the competitive bid of a Licensee unless the customer raises the issue first themselves;

discuss the terms offered to a customer from their Licensee even if the customer raises the issue first (where this happens they must inform the Wholesale Services Manager);

discuss the terms that any Licensee may offer;

give any view about a Licensee or the possible impact of the customer moving to a Licensee.

If staff are in any doubt about a situation they should contact the Wholesale Services Manager or the Legal team.

2.2 Reasonable Information from a Licensee No-one should request from a Licensee more information than Bristol Water reasonably requires:

to carry out our functions as a Wholesale Business;

to ascertain whether the Licensee has sufficient product and public liability insurance;

to comply with any condition of our Instrument of Appointment;

in relation to national security or civil emergencies; or

to comply with any reasonable request for information made by the Environment Agency.


5

2.3 Reasonable Information to a Licensee A Licensee or Potential Licensee must be provided with the information necessary to:

apply for, negotiate, or conclude an access agreement;

comply with any condition of its Water Supply License or any statutory requirement therein;

comply with any reasonable request for information made by an Environment Agency;

comply with any reasonable request for information by a Licensee; In the event of an actual or potential incident that may adversely affect water supply, quality or pressure a Licensee must be provided with the same amount of detail as Bristol Water would require for dealing with our own customers.

2.4 Information Handling Procedure for Incoming and Outgoing

Correspondence The Wholesale Services Manager should be the primary point of contact for all incoming and outgoing correspondence with Potential Licensees. He/she will be the contact during all negotiations and is responsible for ensuring compliance with this Code, including by providing a standard confidentiality agreement. A draft copy of Bristol Water’s standard confidentiality agreement can be found on the Bristol Water website. Once a contract with a Licensee is established the Wholesale Services Desk will be the first point of contact for all enquiries by Licensees. The Wholesale Services Manager and Desk are organisationally separate from the customer facing staff and a separate location from commercial facing staff. Whenever information is requested to or from a Licensee or Potential Licensee the request will be processed by the Wholesale Services Desk and then referred to the Wholesale Services Manager, who is responsible for overseeing the way we meet our obligations for dealing with Licensees under this Code. Once assured the request is in accordance with this Code the Wholesale Services Manager will oversee the communication between the Licensee and the Wholesale Services Desk. The Wholesale Services Manager will be responsible for ensuring any information received from the Licensee is stored securely. Information will be stored electronically on a secure server with access limited to the Wholesale Services Team. Telephone conversation will not be overheard by any customer or commercial facing staff. The Wholesale Services Manager is responsible for passing relevant information to Bristol Water staff who are required to know it only and to the extent they are required to know only. For full details of the procedure and responsible officers see the NHH Retail Separation – Information Obligations Procedure.


6

3. Dealings with an Associate Licensee

Condition R imposes obligations on Bristol Water in relation to our dealings with any Licensee which is also a member of the Bristol Water Group (an Associate Licensee). Water2Business is an Associate Licensee now. Employees will be notified as and when any other Associate Licensee is established. The Head of Legal is responsible for notifying employees of this.

3.1 Relationship with an Associated Licensee Bristol Water plc has a separate retail arm, called Bristol Wessex Billing Service (BWBSL), which is a joint venture with Wessex Water Services Limited. Water2Business is currently an agent of BWBSL but will become a fully independent company prior to non-household retail market opening due in April 2017. Currently Bristol Water plc and Water2Business have members on sitting on both boards. This is for the purpose of market readiness and to ensure customers are not put at risk. Prior to market opening the Water2Business board members who are also on the Bristol Water plc board will be substituted. The independence of the two companies will be ensured through:

separate board structures;

retaining of own board minutes; and

separate audits. This will achieve the requirement that there is no information being passed between the companies to allow an unfair advantage or anti-competitive behaviour.

3.2 Restrictions on Dealings with an Associate Licensee The obligations in Section 2 apply to an Associate Licensee as well as the restrictions listed below, this is to ensure there is a level playing field. The following restrictions apply to dealings between Bristol Water and an Associate Licensee:

the Associate Licensee cannot make wholesale supplies or undertake common carriage arrangements within Bristol Water’s water supply areas until the in area trading ban is relaxed (currently scheduled for 5 April 2016);

the Associate Licensee cannot develop a new source of water for the purpose of any common carriage arrangements within Bristol Water’s water supply areas;

the Associate Licensee cannot, without Ofwat’s consent, sell water (or otherwise make it available) to Bristol Water;

Bristol Water cannot, without Ofwat’s consent, sell (or otherwise make available) to the Associate Licensee any water, or any of its other assets until the in area trading ban is relaxed (currently scheduled for 5 April 2016) ;

all dealings between Bristol Water and the Associate Licensee must be at arm’s length; and

all services provided by Bristol Water to the Associate Licensee, or vice versa, must be recorded, costed and billed to the Associate Licensee or Bristol Water, as the case may be.


7

Bristol Water must comply with the License Condition F and Regulatory Accounting Guidelines, which regulate its financial dealings with group companies and non-appointed functions. The purpose of this Condition and these Guidelines is to prevent Bristol Water’s regulated customers being disadvantaged by any financial transactions for services provided to and from Water2Business and any other group companies. Any services provided to Water2Business by Bristol Water or by Bristol Water to Water2Business will be in line with the requirements of Licence Condition F. Bristol Water staff when undertaking work for Water2Business must:

Keep a record of time spent on work for Water2Business;

Not use any information received in connection with a specific transaction whilst working for Water2Business for Bristol Water’s purposes.


8

4. Training and Monitoring

4.1 Training Bristol Water will provide initial training on the requirements of the Competition Act 1998, Condition R and this Code to all employees in roles or functional areas affected by the Code. Staff will be made aware of changes to the Code through regular updates. Specific training will be provided to relevant staff on:

Information Handling Procedure;

Accounting and Charging for Services to and from an Associated Licensee;

Restrictions on discussing Licensees with customers. For advice and guidance about competition law, Condition R or this Code, employees should initially discuss the matter with the Legal Team.

4.2 Monitoring and Review Staff knowledge of the Code and procedures will be assessed and monitored through the e-learning programme. The Internal Audit team will periodically audit processes, systems and documentation to ensure compliance with this Code. Under Condition R the Code must be reviewed annually or more frequently if necessary to address any issues that arise. The Legal Team is responsible for this.

4.3 Breaches Any breach of this Code may result in disciplinary proceedings being taken against the employee involved. Bristol Water’s procedure for the disciplinary policy shall be followed. This is summarised as:

an investigation by the employee’s supervisor or manager;

disciplinary hearing before a panel of the department manager and a member of HR (no one involved in the investigation may be part of the panel);

appeal before a senior manager (no one involved in the investigation or hearing may be involved in the appeal).

Breaches of this Code that could have or did have sufficiently serious consequences may be considered as gross misconduct. Any breach of this Code could put Bristol Water at risk of breaching the Competition Act 1998, the Water Industry Act 1991 and/or our Instrument of Appointment. In these circumstances, Bristol Water may be fined up to 10% of our turnover for a period of up to 3 years. Ofwat may also take enforcement action against Bristol Water and impose financial penalties.


9

In addition, for certain offences under the Competition Act, individual employees may be liable personally and, if found guilty, could be fined or sentenced to a term of imprisonment.


10

4. Glossary of terms

Term Meaning

Arm’s length As if negotiated independently

Associate Licensee A Licensee which is an associate company of Bristol Water plc

Compliance Code (or Code) This document

Confidential Information All negotiations with, and any information received from or about, a Licensee, and their Non-Household Customer, in the course of or in contemplation of the provision of a Wholesale Supply or Combined Supply

Instrument of Appointment The document appointing Bristol Water as a water undertaker

Licensee A company granted a licence by Ofwat to make retail supplies (or retail supplies and Combined Supplies) to Non-Household Customers using more than 5,000m3 (5 megalitres) of water per year per site in England

Non-Household Customer The owner or occupier of eligible non-household premises, having an annual consumption of over 5 megalitres of water, receiving or wishing to receive a water supply from Bristol Water, including any potential owner or occupier of such premises

Normal Dealings Day to day dealings with Non-Household Customers, which are dealt with by the Retail Business

Retail Activities Activities that constitute the provision of goods or services by Bristol Water directly to one or more customers, and such activities ancillary designated by Ofwat from time to time

Retail Business The business functions of Bristol Water responsible from time to time for providing Retail Activities to customers

Wholesale Services All regulated activities undertaken by Bristol Water other than Retail Activities

Wholesale Services Team The team within Bristol Water’s Wholesale Business responsible for the provision of Wholesale Services to Licensees designated from time to time by the Chief Executive Officer

Wholesale Business The business functions of Bristol Water responsible from time to time for providing Wholesale Services

Wholesale Supply A supply made by Bristol Water to a Licensee

Documents

Compliance Code under Condition R - Bristol Water · Bristol Water Compliance Code under Condition R 1 ... Associate Licensee any water, or any of its other assets until the in area