Utility Week

26 | 20TH - 26TH APRIL 2018 | UTILITY WEEK Customers Conference Future Retail #1 23 March, Hallam Conference Centre, London A year of ups and downs Twelve months on from the opening of the English water market, industry figures met to discuss its performance so far and to identify the areas requiring improvement. Lois Vallely reports. T he open water market is one year old. During the first year, we have wit- nessed both good and bad, and there is no doubt it has been a monumental chal- lenge for the sector. It was with this sentiment in mind that delegates from across the market gathered at the Hallam Conference Centre in London for the UK's inaugural water retailing conference – Future Retail #1 – to discuss what's gone well, what hasn't, and what all players must do to smooth the running of the market as it moves beyond the first-year mark. The fact the market opened on time in the first place is testament to the hard work of everyone involved. As Market Operator Ser- vices Limited's (MOSL) market performance director, Steve Arthur, pointed out, although the systems "creaked a little" at market opening, they held up. The feeling in the room at Future Retail #1 – held by Utility Week's sister title Water. Retail and sponsored by CGI – was one of cautious optimism. True, the market has experienced a slow start, but customer take- up has been far faster than it was in the early days of the Scottish market, which opened in 2008. For customers that have taken advan- tage of Scottish market competition, tangible benefits have been plentiful. Andrea Mancini, head of competition, Water Industry Commission for Scotland, took to the stage to talk about the lessons the English market can and should learn from the Scottish market. Although it had a slow start, the Scottish market has been successful in that most non-household cus- tomers are better off. Most have renegotiated their terms of supply, and there has been an increase in tailored water efficiency advice and use of technology – both things the reg- ulators in the English market are pushing for. The English market has so far seen a healthy number of entrants. Currently 25 companies have been granted a retail licence. These include retail arms of incum- bent companies, entrants from the Scottish market and entirely new players. Of these, only around 15 are actively pursuing growth in the market. However, MOSL's Arthur hinted at a number of new players in the pipeline. Room for improvement During a six-strong panel discussion involv- ing three retailers, two wholesalers and a senior representative from Ofwat, speakers agreed that data is still far from complete, the quality of interaction between wholesal- ers and retailers leaves much to be desired, and transparency of wholesale tariffs is an issue that continues to plague retailers. Attendees said the non-household water market is still inundated with poor quality data. The retailers on the panel said they are still routinely encountering problems with data, with knock-on effects including inaccu- rate billing for customers. Wave chief execu- tive Lucy Darch said data quality varied widely between wholesalers, but meter data was a particularly pressing problem. "We get some meter co-ordinates that would put the meter in the sea," she said. Josh Gill, chief executive of small retailer Everflow, also cited problems with meter- reading location data, revealing the format of data in some instances meant that "as a new retailer, that data is absolutely useless". Another concern raised at the conference was that complaints about non-household water retail have soared since market open- ing, from 730 in 2016 to 2,270 in 2017. The Consumer Council for Water's deputy chief executive Phil Marshall revealed a staggering eight out of ten of these complaints relate to the three biggest companies – Castle Water, Water Plus and Anglian Water Business (now part of Wave). CCWater had been expecting an uptick in complaints in the early months of the market as consumer awareness grew and teething issues were ironed out, but admitted they have gone up "quite significantly more than we might have anticipated". Other major market concerns aired at the conference were the arrangements for bilat- eral communications between individual wholesalers and retailers, and the retail mar- gin. Business Stream chief executive Johanna Dow said the current margin did not reflect the costs of operating in the market, particu- larly those of funding the stringent working capital requirements. The role of brokers was another hot topic on the agenda. During the final panel dis- cussion of the day, a lively debate broke out about whether customers and retailers should use brokers that are not signed up to a voluntary code of conduct. However, most were in agreement that brokers have the potential to add value. Overall, delegates and speakers agreed that, despite its success in many areas, there are several issues in the open market that must be resolved. This will be driven in part by market per- formance charges, which were introduced from 1 April. These payments, for which market participants are liable if they fail to deliver against market performance com- mitments, were suspended for the first year of the market but will now "begin to bite", according to MOSL's Arthur. Aer just a year of existence, the market is still very much finding its feet. The next 12 months will be an invaluable opportunity to continue to improve the running of the mar- ket, and ensure it reaches its full potential and is truly for the benefit of customers.

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