Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/807744
28 | 7TH - 13TH APRIL 2017 | UTILITY WEEK Customers December 2011 – Defra first proposes non-household retail competition in England in a white paper February 2014 – Open Water programme director Keith Fowler quits unexpectedly, John Parsonage of PA Consulting is appointed interim director August 2014 – Ofwat announces it will wind down OWML, aer the Treasury refuses to classify it as a private company Market opening timetable F inally, it's happened. The opening of the non-domestic water market to competition has been a long time com- ing. In fact, it is more than five years since the Department for Environment, Food and Rural Affairs first mooted it in a white paper at the end of 2011. At times, it looked like the project would fail. A series of setbacks in the early years meant the answer to the o- repeated question, "will the market open on time?" was uncertain to say the least. That market opening hit the deadline of 1 April 2017 is credit to an unprecedented col- laborative effort between England and Wales water regulator Ofwat, its Scottish counter- part Wics, and the companies themselves. Initially sceptical about the cost versus ben- efit implications of market opening, the com- panies soon accepted its inevitability, and realised that their reputation and that of the sector as a whole hung in the balance. The hiccups that beset the market's early days began early in 2014, with the sudden departure of Keith Fowler, chief executive of Ofwat's Open Water programme. Months later, in August, Ofwat announced that it was winding down Open Water, which was set up to oversee market opening, because the Treasury had unexpectedly refused to classify it as a private body, lumbering it instead with the bureaucracy and red tape that comes with a public classification. Red faces all round as Plan A hit the buff- ers. Enter Alan Sutherland, chief executive Wics, which had overseen the opening of the Scottish market. Sutherland, who was on the board of Open Water, effectively took the reins of the market opening and saw it through the detailed design stages. This arrangement was on the verge of being finalised in the form of a written agree- ment between Ofwat and its Scottish coun- terpart, when the Wics board unexpectedly vetoed the document and Plan B was scup- pered. This, perhaps, came as less of a shock to Ofwat, which may have been keen to reassert its control of the programme. Chief executive Cathryn Ross wrote to all water company chief executives to outline the new plan – effectively Plan C. Plan C stuck, with a little help from the companies themselves, three of which had in the meantime set up Market Operator Services Limited (MOSL), a private company which assumed oversight of market opening, and has since been appointed the market operator. That was in February 2015, and in the lit- tle more than two years since then, all par- ties have worked together to hammer out the details and get the market open on time. The desired effect of market opening, to force companies to re-evaluate their business models and seek efficiencies, seems to be playing out, with a number taking advantage of the option to exit the market (originally set to be denied them), and others selling, acquiring or merging their non-domestic retail arms. Whether the other potential ben- efits of innovation and improved customer service materialise remains to be seen. This has become all the more significant since December 2015, when then-chancellor George Osborne threw a hand grenade into the sector with his suggestion that domes- tic competition should follow non-domestic by 2020. This timetable is now in doubt fol- lowing Brexit, Teresa May's appointment as prime minister, and a change of priorities in government. Nevertheless, ministers will be watching the early days of the market closely, with the market's success an impor- tant indicator of whether a domestic market is viable. For now, though, the sector can breathe a short-lived sigh of relief and congratulate itself on achieving what once seemed near- impossible. In recognition of the new mar- ket Utility Week has launched a new title – Water.Retail. A market is born After several setbacks, the non-domestic water retail market opened for business – on time and without a hitch, says Ellen Bennett. Water.Retail is a new fortnightly publication published by Utility Week covering the non-domestic retail water market. It is available free to Utility Week Intelligence subscribers or as a standalone product at: utility-week.co.uk/retail January 2014 – Open Water programme publishes blueprint for retail market July 2013 – Ofwat establishes Open Water programme, with Open Water Markets Limited (OWML) set up to oversee it May 2014 – government establishes framework by which to create the new market, as part of the Water Act 2014 2014 2013 2012