Changes of Payment Terms for Wholesale Charges
In March 2020, the Scottish Government announced measures to support the water market and business customers in light of the economic impact of the coronavirus. From April 2020, wholesale payment terms were temporarily relaxed so that charges became due in the supply month to which they relate, two months later than normal.
The CMA revised their settlement timetable accordingly.
As set out in WICS’ consultation conclusions on ‘Measures in support of the retail market in light of the current pandemic’ on 21 May 2021 and Directions issued on 31 May 2021, all Licensed Providers began to transition back to one-month prepayment in July 2021. This will mean that both the July 2021 P1 and August 2021 P1 invoices were issued in July 2021 and both were due for payment on 19 July 2021.
The extent of prepayment required in future and timing of future transitions will depend on which licence conditions a Licensed Provider chooses to sign up to and, where relevant, the assessment of their financial resilience. Futher information can be found on the invoicing timetable.
The timing of reconciliation invoices (i.e. for R1, R2, R3 and RF settlement runs) is not affected by the temporary changes to payment terms. Scottish Water has suspended the application of late payment interest whilst payment terms are relaxed. Interest continues to be paid to Licensed Providers on any wholesale charges which have been paid in advance, in accordance with clause 8.8.2 of the Wholesale Services Agreement.
These changes have been made to recognise the extraordinary pressures being placed on many businesses and the knock-on effect they will have on the cashflow of Licensed Providers. The intention is to ensure that business customers impacted by the current economic pressures benefit appropriately from these measures.