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12 | 29TH APRIL - 5TH MAY 2016 | UTILITY WEEK Policy & Regulation Roundtable Competitor challenges in the water market London, 19 April 2016 Retail market opening is just first step in water's evolution Players have begun to position themselves for the opening of the non-household water retail market in April 2017, but the market is likely to be completely different as early as 2018. Lois Vallely reports from a roundtable debate on the challenges to competitors. T he non-household water retail mar- ket is due to open next year. With just under a year to go, current and poten- tial players in the market have begun to posi- tion themselves, but the challenge reaches beyond the go-live date in April 2017, with the market likely to be completely different as early as 2018. This was the conclusion of a Utility Week roundtable, sponsored by Fujitsu, as delegates met to discuss the challenges to competitors in the new market. A question was posed about what might happen aer market opening, when the mar- ket has shaken out, to which the response came that the focus seems to be on the here and now, which is important but is actually just a moment in time, and companies must really be making sure their strategy operates effectively in the future. In some ways retailing for the water sec- tor will be less complicated than retailing for the energy sector, which is preparing for the rollout of smart meters, due to begin in earn- est this summer. However, delegates agreed that elements such as billing will be more difficult, as the many different components to a water bill will make errors more likely. Representatives for incumbent water companies claimed that larger firms are bet- ter placed to compete than new entrants because "water is in their DNA". They under- stand the bills and the environment and they are passionate about water. So how much of a risk are new entrants to incumbent companies? And who are they? Small players from the Scottish mar- ket? Supermarkets that want to self-supply? Energy or other utility companies? Or per- haps all of the above? Not everyone can win in the market, and not everyone will be able to stay and play aer market opening. There are many chan- nels to market and, as more and more compa- nies join it, others will begin to exit. Delegates referenced the energy market, which is constantly evolving and never standing still. What defines success in the market? And how does a company come through this with a large customer base? The discussion turned to what market participants can do to be successful and encourage customers to switch to them, starting with branding. Regional names probably won't play out effectively in other areas of the country, dele- gates decided. However, one incumbent said that a brand linked to heritage is important to some customers. Delegates said a lot of customers will only switch once, while others will go to tender every year. Larger customers are very aware of market opening, but SMEs are less so, as water companies generally have a much less dynamic relationship with them. A big question, delegates decided, was whether or not the market will open on time. Representatives from companies said there is "no doubt" that they will be ready on 1 April 2017, but there is still a lot to prepare between now and then. Speakers agreed that, although the time- scale is tight, and Market Operator Services Limited (MOSL) is currently 'on red' – mean- ing it is experiencing a delay to its opera- tions – the market will open on time because there will be so much pressure to be ready, and the 'embarrassment factor' if a company is not will be significant. Delegates questioned how dynamic the new market will actually be, and how turned on customers are really going to be to save £5 in a year. Is it going to take off in the way that people want it to? Delegates concluded that it is the first step on the road of the gradual evolution of the water industry.