Utility Week

16 | 6TH - 12TH APRIL 2018 | UTILITY WEEK Policy & Regulation Analysis A er years of careful planning and meticulous preparation, the English water retail market opened on 1 April 2017. The change was widely deemed the big- gest in the water market since privatisation, and created the largest open water market of its kind in the world. A year aer that momentous event, mixed feelings have emerged among stakeholders about what has gone well, and what has not. Many of the concerns aired about mar- ket mechanisms and other arrangements before the market opened – such as the tight retail margin, the extent to which the play- ing field would be level, and whether or not data would be of a high enough quality and completeness – have materialised in some form or other. But such teething issues are the norm for any new market and should not be blown out of proportion as indicators of market failure. When the market opened, retailers effec- tively became the customers of the wholesal- ers, and wholesaler performance is another area that has sparked much debate and Wholesalers in open water A year on from market opening and wholesaler services to water retailers are at the centre of debate around how well the market is performing. Exclusive Water.Retail research shows why. OVERALL SCORES SOURCE: WATER.RETAIL RESEARCH United Utilities Southern Water Wessex Water Yorkshire Water Anglian Water North- umbrian Water South West Water Severn Trent Thames Water 7.07 7.04 6.98 6.71 6.48 6.37 6.21 7.31 7.35 Scope of the survey There are currently 25 companies with retail licences, and 15 of them are actively engaging with customers and pursuing growth. We asked all 15 retailers to complete a survey anonymously and take part in a confidential interview regarding the performance of their wholesaler counterparts, a request to which 11 responded. Each retailer was asked to give each of the nine largest English wholesalers a score out of 10 for their performance on 11 different criteria. Note: some retailers do not work in all wholesaler areas or have not had experience in one or more of the criteria. There- fore, not every wholesaler received a score on every criterion from every retailer. Overall scores were worked out as an average of the scores given by each retailer. discussion among market participants. This inspired Utility Week's sister publication Water.Retail to carry out exclusive in-depth research, which found a distinct lack of sat- isfaction among retailers with many aspects of the service they receive from wholesalers. Water.Retail's unique dataset shows lit- tle variation between the overall scores of wholesalers, with United Utilities ranking highest and Thames Water scoring lowest. However, there was more variation between individual criteria. For example, "portals" and "bilateral communication". The fact that wholesalers' scores varied so dramatically in individual criteria implies no wholesaler is doing everything well. Many retailers speaking to Water.Retail during the survey said they would like to see more consistency in the way wholesal- ers interact with them and the way they put together their pricing, as well as a common language and terminology. One retailer suggested the wholesale community should find common ground and standards to help the market, because it sees no evidence so far of this happening. Another retailer said bilateral forms for com- munication in the market are "inflexible" to any issue outside of business as usual, allowing wholesalers the opportunity to "hide behind false service level agreements without solving simple queries". Looking at each wholesaler individually, however, more variation was found between scores for each criterion. In a premium report, Utility Week has analysed each of the criteria and the extent to which they are affecting the smooth run- ning of the market. KEY POINTS TO TAKE AWAY The average score overall was 6.84 out of 10, with little variation between the overall scores. There was more variation between scores in specific catego- ries, for example, scores given for "portals" ranged widely. United Utilities, Southern Water, Wessex Water, Yorkshire Water and Anglian Water all scored above the industry average. Northumbrian Water, South West Water, Severn Trent and Thames Water all scored below average. The three areas of greatest concern for retailers are around portals, credit arrangements and transparency of wholesale tariffs. On portals, Thames Water scored lowest and Wessex Water highest. For "credit arrangements", Northumbrian Water and Thames Water came joint top. Meanwhile, Severn Trent was found lacking. For "wholesale tariff transpar- ency", Yorkshire Water and Northumbrian Water scored high- est and Severn Trent again ranked bottom.

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