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14 | 21sT - 27Th NovEmbEr 2014 | UTILITY WEEK Policy & Regulation Analysis T he puzzle of how to introduce competi- tion to the English non-domestic water supply market continues to bamboo- zle those in the industry trying to piece it together. The end picture is known: from 1 April 2017, business customers will be able to choose who supplies their water and waste- water services. However, with less than 28 months until the non-domestic water retail market in England opens to competition, the best laid plans of the industry have been written and rewritten so many times that the original note must be more correction fluid than paper. Despite iteration aer iteration of plans made and then adapted, there are still many questions and pressing issues that need to be answered. And answered quickly. Completing the water jigsaw The start date for non-domestic retail water competition in England has been set, but vital pieces of the puzzle are still missing. Mathew Beech assesses the state of play. Thames Water Commercial Services' (TWCS) managing director Graham Southall says there is "a lot still to be done" in setting up and building the central systems for the market. Indeed, even Alan Sutherland, the Scot- tish water regulator who sits on the board of Open Water and has taken a lead role in transferring the Scottish model of competi- tion to England, admits he is "worried" about some aspects of the programme. He nonethe- less professes himself confident that the sec- tor will be able to open the market on time. Scottish template The Scottish model is being used as a tem- plate for the English retail market, in an attempt to make use of what is already work- ing (and has been since 2008), and as Open Water said in its Market Architecture Plan, "we should not try to reinvent the wheel". There are issues around the market design, the appointment of the market opera- tor, and just how many companies will be pre- paring to enter the market once it has finally been created – particularly since at the 11th hour the government introduced the option of allowing incumbents to exit the market. And time is running out. The opening of the non-domestic sector may begin publicly in April 2017, but the water companies – as well as Ofwat, Open Water Market Ltd, and the-yet-to-be-appointed market operator – have to finalise the market design and set- up ready for the companies to fully test the structures ahead of the hard launch date. This testing is supposed to be completed by October 2016. Timeline 2008 2009 2010 2011 2012 2013 2014 The rollout of non-domestic retail water competition in gb markets December 2011: UK government publishes the Water White Paper Water for Life July 2012: Draft Water Bill published July 2013: Open Water programme established April 2008: Scottish market opens for non-domestic competition 18 February 2014: Open Water director Keith Fowler steps down Opening up the market to competition relies on one key ingredient: competitors. Without them, there is no point in the industry going through the arduous and complex process of creating a market. Utility Week has been told by one industry analyst that there will be limited competition come 2017 because "companies just don't see enough of a margin in it". However, others are more optimistic. Wics chief executive and Open Water board member Alan Sutherland says some of the major water companies have "been very active" in preparing themselves for competi- tion in England. United Utilities, Severn Trent, Anglian Water and Thames Water have all been par- ticipating in Scotland, while Northumbrian Water has been going through the licence accreditation process. He says that the water companies as they are will split into three groups: a "handful" that will exit the market permanently; those that "still see the benefits of vertical integra- tion"; and those with "a view to staying in the market and competing hard". The experience that can be gained now by competing in Scotland is important and gives those that have done so the advantage of seeing how the market works. TWCS managing director Graham Southall says the Scottish market, which has been up and running since 2008, is a great testbed for the English market to look to – not only because the English market will be based on the Scottish model, but also because the companies involved there are likely to come south of the border too. Open water: who will be contesting the market?