Who is going to regulate the UK water market from 2027 onwards?

On the afternoon of 21 July 2025, Steve Reed made an oral statement to the House of Commons announcing the end of Ofwat. On the same table sat a 464-page report by Sir Jon Cunliffe, the former Deputy Governor of the Bank of England, recommending exactly what Reed was about to announce: the consolidation of four separate regulators into a single body. Almost a year on, the Bill creating that body is in the House of Lords, the timeline is settling into focus, and the question for any business that pays a water bill is this: who are you actually dealing with from 2027 onwards?

For most B2B water buyers the answer is, on close inspection, less dramatic than the political theatre suggests. Your retailer relationship continues. Your licensed wholesaler continues to own the pipes. The Market Operator at MOSL continues to switch you. What changes sits one layer above all of that, in the body that issues licences, sets price reviews, and decides when a water company has crossed a line. That body is being rebuilt from scratch. Here is what is in the Bill, what is missing from it, and the dates that matter.

Why is Ofwat being abolished?

The Environment Secretary's oral statement of 21 July 2025 was not a discussion document. It was a decision. "Today marks the start of a water revolution," he told the Commons. "We will bring water functions from four different regulators into one. A single, powerful regulator responsible for the entire water sector will stand firmly on the side of customers, investors and the environment and prevent the abuses of the past."¹

The reasoning was on the table beside him. Sir Jon Cunliffe had been appointed by the Secretary of State on 22 October 2024 to chair the Independent Water Commission. The Commission received more than fifty thousand responses to its February 2025 call for evidence and reported in 464 pages on the day Reed addressed the House.² The report contained 88 recommendations. The headline was the abolition of Ofwat.

Cunliffe's own statement was measured. "Restoring trust has been central to our work," he said. "Trust that bills are fair, that regulation is effective, that water companies will act in the public interest and that investors can get a fair return."³ The political register was Reed's; the regulatory analysis was Cunliffe's. The two together carried the announcement.

What the new regulator will do

The legislative vehicle is the Water Regulation Bill, introduced to Parliament in 2026 and at House of Lords Committee stage as at May 2026. Its long title runs: "A Bill to abolish the Water Services Regulation Authority; to establish a Clean Water Authority and to make provision about its powers and duties; to make further provision about the regulation of water; and for connected purposes."⁴

Four bodies fold into one for England:

• Ofwat — economic regulation, price reviews, licence enforcement, the policing of the licensed retailer regime.
• The Drinking Water Inspectorate (DWI) — drinking water quality.
• The Environment Agency's water functions only — pollution enforcement, abstraction licensing, environmental permitting.
• Natural England's water functions only — ecological water quality, designated freshwater sites.

The Environment Agency and Natural England keep all their non-water work. They lose the water-shaped slice of it to the new body, named in the Bill the Clean Water Authority (CWA).

Cunliffe's report also recommended a senior Chief Engineer role inside the new regulator — a post that has not existed inside English water regulation since privatisation in 1989. The point is hands-on infrastructure inspection: an "MOT" for the network rather than a paper-based audit. The Bill includes it.

Separately, the Bill creates eight new regional water system planning authorities in England (one national in Wales) for long-term resource planning, relevant mainly for businesses with abstraction licences or growth-corridor connections.

Does the Water Regulation Bill change your business water contract?

For finance directors and procurement leads, the most relevant detail in the Water Regulation Bill is what it does not address.

It does not change the licensed retailer regime. The 22 active licensed retailers in the English non-household market — Business Stream, Castle Water, Water Plus, Wave Utilities, Pennon Water Services and the long tail — remain licensed retailers, with the same WSSL licences they hold today. The Bill assumes the CWA inherits Ofwat's role as the licensing authority and, in due course, sets the Retail Exit Code (REC) and oversees the Interim Supply Arrangements (ISA). But it does not relegislate either of those frameworks. They continue, just under a new logo.

That is a deliberate choice and, on the brief evidence available, a sensible one. The 2025-26 REC review is in motion, the Cost Recovery Mechanism consultation closed in March 2026, and the Market Performance Framework reform went live on 1 April 2025. Bundling all of that into a new regulator's first year would require simultaneous operational and legislative transitions that no comparable regulatory handover has managed successfully. The Bill therefore picks up the constitutional question (who regulates) and leaves the operational architecture (how they regulate the non-household market) to be inherited intact.

In practice, this means: your retailer's licence is unchanged. Your contract is unchanged. If you were already planning a REC-driven retender against the April 2027 implementation date, plan it. If you have a credit-balance issue with a retailer in financial distress today, the regulator that adjudicates it is currently Ofwat and from some point after Royal Assent will be the CWA, with no change in the underlying rules.⁵

Wales takes a different path

The Cunliffe Commission was a joint UK and Welsh Government exercise. Its findings apply across both jurisdictions. The implementation, by force of the devolved settlement, is different.

Wales does not get the Clean Water Authority. Senedd Research's 2026 analysis, which reflects Senedd and Welsh Government discussions to date, sets out a separate path.⁶ Natural Resources Wales (NRW) keeps its existing water environmental functions. A separate Welsh economic water regulator will be created over a longer transition, potentially by integrating Ofwat's Welsh economic responsibilities into NRW or by establishing a new standalone body. The timetable runs in three phases:

• 2026 to 2028-29: legislative changes (a Welsh Water Bill in the next Senedd term)
• 2028 to early 2030s: setting up the new Welsh economic regulator and system planning
• Mid-2030s: new Welsh regulator fully operational

The new Welsh regulator must be ready by 2030 at the latest to lead the 2034 price review (PR34).⁶

For B2B buyers with cross-border portfolios — manufacturers with a Welsh plant on Dŵr Cymru and English plants on Severn Trent, for instance — that introduces a regulatory split that will outlast any single price review. The licensed retailer regime currently spans both jurisdictions. The Welsh Government has acknowledged in its briefings that the DWI's "England and Wales" remit being absorbed into the CWA "may pose challenges" for the devolution settlement, and is treating that as a live drafting issue.⁶

The handover timeline, in plain dates

The label "from 2027" is doing some heavy lifting in the political messaging. Royal Assent is the earliest plausible point at which the CWA exists in law. Operational handover — staff transfers, system migration, an appointed Chief Executive, statutory powers vested — comes later. As of 16 May 2026, no Chief Executive has been named. Chris Walters continues to run Ofwat in the interim.⁷

What this means for B2B water buyers

Three questions are worth raising in any internal procurement review this year.

Who is going to enforce my retailer's licence in 2027 and beyond? The Clean Water Authority in England, and either NRW or a yet-to-be-created Welsh economic regulator in Wales. Your retailer's WSSL licence does not change; the body that polices it does. Any retailer that quotes "2027 regulator uncertainty" as a reason for not committing to service levels is seeking to exploit the transition as cover for weak service commitments. The licensing framework, the REC and the ISA continue under the new body without reissue.

Where do I direct a complaint from 2027 onwards? Cunliffe recommended converting the Consumer Council for Water (CCW) into a statutory Water Ombudsman, with consumer advocacy transferring to Citizens Advice. The Bill picks this up. From the point at which the Ombudsman is constituted, your first port of call for an unresolved retailer complaint is the Ombudsman, not the CWA. The CWA's role is to discipline a retailer, not to adjudicate an individual customer dispute.

What happens to abstraction licences and trade-effluent consents? Those currently sit with the Environment Agency (abstraction) and the wholesaler (trade effluent). Under the Bill, EA water functions including abstraction move into the CWA, but trade-effluent consents continue to be held by the wholesaler. Pending applications mid-flight when the handover happens are expected to be honoured by the receiving body, although the precise transitional provisions are still being finalised in Lords amendments.

What is genuinely uncertain

Three things in this transition are still live questions.

The first is whether the Bill will reach Royal Assent in 2027. House of Lords Committee scrutiny has produced a steady flow of amendments, particularly around the CWA's accountability to Parliament and the precise scope of devolved functions. None of those amendments threaten the central architecture. A 2027 Royal Assent is plausible. A slip into 2028 is also plausible.

The second is the CWA leadership. When Cunliffe reported in July 2025, Water UK chief executive David Henderson told BBC Radio 4's Today programme that "the industry welcomes the report which sets out a strong set of radical reforms".⁸ Nearly a year on, there is no sign of the appointment that would give substance to that reform — no Chief Executive has been named for the CWA as of May 2026. Chris Walters continues to run Ofwat in the interim.

The third, for non-household water buyers specifically, is whether the new body inherits Ofwat's hesitancy on lifting the REC price caps for mid-sized customers. Ofwat is expected to publish its final REC26 determination in spring or summer 2026, before the new body exists. If the determination is wide-ranging, the CWA will start with a coherent framework. If it punts the difficult decisions into 2028, the CWA will have to revisit them in its first year. Most of the regulatory press expects the former.

The defensive position for a buyer is to assume that the operational regime continues unchanged through 2027, to ask any prospective retailer to commit to service levels under the existing REC and BR-MeX framework, and to treat the regulator nameplate change as a brand exercise rather than a strategic one.

Read next: our guide to what happens to your account if a water retailer goes bust covers the ISA reform and credit-balance exposure in detail.

Need help preparing your water portfolio for the 2027 handover? Our business water team runs procurement reviews against the current Ofwat and forthcoming CWA framework. The free water leak calculator returns the cost of an undetected leak at your regional wholesaler's unit rates. Request a free portfolio review — we'll come back to you inside two working days.

Written by Faith Labong, Staff Writer at Purely Energy. Peer-reviewed for technical accuracy by Mark Hoffman FCA. Sources retrieved 16 May 2026.

Frequently asked questions

Who will regulate the UK water market from 2027 onwards?

The Clean Water Authority (CWA), a new body in England that will absorb Ofwat, the Drinking Water Inspectorate, the Environment Agency's water functions and Natural England's water functions. The Water Regulation Bill creating the CWA is at House of Lords Committee stage as of May 2026, with Royal Assent expected in 2027. In Wales, Natural Resources Wales keeps environmental functions and a separate Welsh economic regulator will be created over a longer transition.

Why is Ofwat being abolished?

Environment Secretary Steve Reed told Parliament on 21 July 2025 that Ofwat had failed customers, allowing water companies to mismanage billions of pounds of customer money. The announcement followed the Independent Water Commission's 464-page final report (the Cunliffe Review), chaired by former Bank of England Deputy Governor Sir Jon Cunliffe, which recommended consolidating water-sector regulation into a single body.

What is the Cunliffe Review?

The Independent Water Commission, chaired by Sir Jon Cunliffe, was established on 22 October 2024 by the UK and Welsh governments. It received over 50,000 responses to its February 2025 call for evidence and published its 464-page final report on 21 July 2025 with 88 recommendations. The headline recommendation, to abolish Ofwat and create a single integrated regulator, was accepted on the day of publication.

Does the new regulator change my business water contract?

No. The Clean Water Authority will inherit the licensed retailer regime, the Retail Exit Code (REC), the Interim Supply Arrangements (ISA) and the Market Performance Framework intact. Your retailer keeps its licence, your contract continues, and the operational rules carry over under the new body without reissue.

When does the Clean Water Authority actually start work?

The Clean Water Authority will exist in law from Royal Assent of the Water Regulation Bill — the earliest plausible point is 2027. Operational handover comes later, with the CWA expected to be fully operational by 2028 or 2029. Ofwat continues to run, under Interim CEO Chris Walters, until then.

Does the Clean Water Authority cover Wales?

No. Wales follows a separate path: Natural Resources Wales keeps environmental functions, and a new Welsh economic regulator will be created via Welsh legislation in the next Senedd term. The new regulator must be ready by 2030 to lead the 2034 price review (PR34).