focus market focus - mosl.co.uk Market Focus (finalR).pdf · market focus Market Focus April 2018 1 Welcome to our special anniversary edition of Market Focus, providing an update

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Market Focus April 2018 1

Welcome to our special anniversary edition of Market Focus, providing an update on MOSL activities, and a look over the first year of the non-household water retail market.

At the end of March 2018, 123,005 SPID switches had taken place, representing a switching rate of 4.6% or 10.5% in volumetric terms.

In the first three months of 2018, we saw a total of 29,690 switches, which was just less than the previous quarter. This meant that the third quarter saw the greatest number of switches in year one, once pre-market switches had been accounted for. On average, we have seen a rate of 9,273 switches per month in the first year of the market.

From a geographical perspective, we have seen switching up and down the country, with activity concentrated in the South and South East of England. We have

Market activity

Today we published our monthly market charts, providing an insight into the full-year data on market activity.

continued to see a preference for customers to move both their water and wastewater services to a single retailer.

There are now 41 retailers active in the market, of which 12 are regional, 3 are self-supply and 26 are national retailers.

Since market opening, we have seen 4 new national retailers enter the market, with 4 more on their way to doing so. Of the 26 national retailers, many are either new or small players, small out of area NAV arms, or intermediaries, yet to be widely active. So far, we’ve seen between 12 and 16 national players active in different wholesale areas, excluding NAV areas.

This year has seen a tremendous effort by all parties to ensure that the market continues to improve and evolve for the benefit of end customers.

Happy birthday to the water retail market!

On Sunday 1 April, the non-household water retail market officially celebrated its first birthday.

So far, we have seen a market that is evolving, and there’s much still to look forward to over the coming months.

Happy Birthday!one market

One year...

Cumulative Switching of Service

Monthly Switching Rate

Switches as at the first business day of the current month

Total supply points switched as at the first business day of the current month: 123,005

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Financial performance

In line with our commitment to being a cost-efficient market operator, MOSL came in under budget by £1.7m for the year 2017/18, with a cost of £942k to operate the market per month.

This has been achieved through a £700k saving against the base budget of £10.2m and a £1m saving through change and contingency.

Supporting market change

To date, in the first year of the market, the Panel has supported the consideration of 35 code changes and established 5 Committees (Trading Disputes, Market Performance, Market Incident Management Plan, General Data Protection Regulation (GDPR) Issues and Trade Effluent Issues).

It has been positive to see the industry using the governance arrangements to affect positive change in the market, with

a diverse range of changes considered, from an update to market entry and reassurance to a clarification of unsecured credit allowance.

Moving forwards into the second year of the market, one of our priorities will be to support the Panel looking at strategic market opportunities, such as a potential code review, to make the codes more accessible to all and help reduce barriers to entry.

Change proposal updates

The Panel last met on Tuesday 27 March.

During the meeting, change proposal CPM010: ‘Amendments to the Retailer Board Nomination Process’ was recommended to Ofwat for implementation on 31 July 2018. This change proposal seeks to make amendments to the Market Arrangements Code (MAC) to establish three classes of membership within MOSL. All three classes of membership will have equal voting rights. The three classes of membership include wholesaler members, associated retailer members and unassociated retailer members. In addition to this, the MOSL Board will include an Associated Retailer Director. This is part of an ongoing piece of work by the Board to align the MAC and the Articles of Association.

The following change proposals were also recommended to Ofwat for implementation on 28

September 2018:

6 CPW032: ‘Amend H/04 form to clarify tariff effective date’

6 CPW025: ‘Extending TCORR functionality to inactive data

Change proposal CPW032 introduces a new field onto the H/04 form to clarify when wholesaler tariff changes will take effect.

Change proposal CPW025 aims to extend the functionality of TCORRs (transaction corrections) so that they can be used on deregistered SPIDs. It was recommended that this change be implemented in time for the September 2018 CMOS release.

Market Focus April 2018 2

MOSL activities around the one-year milestone

At the end of May MOSL will be publishing a one-year edition of its CEO Market Review, providing more insight into the first year of the market.

In celebration of the one-year milestone, on 1 April, we published a short animation on our social media platforms, Twitter and LinkedIn, to highlight just some of the work and achievements of the year.

Internally, MOSL colleagues took part in a team-building treasure hunt around the City of London.

The afternoon concluded with ‘the ultimate water market quiz’, and a toast to welcome year two of the market.

Market Performance Standards (MPS) charges

Aside from the one year milestone, 1 April 2018 also marked the introduction of MPS charging.

The standards measure performance of retailers and wholesalers against the service level agreements (SLAs) in the Market Terms and the Code Subsidiary Documents (CSDs).

Charges are now being applied to wholesalers and retailers with respect to performance against the MPS. The introduction of charges is expected to drive a step change in market behaviours and encourage continued performance improvement.

The introduction of charging follows a comprehensive review into the MPS led by the Market Performance Committee (MPC) and supported by the Panel and MOSL, to ensure that the standards will drive the desired outcomes.

The MPC is also working to consider future charging against the Operational Performance Standards (OPS), which measure wholesaler performance against the SLAs in the Operational Terms.

5committees established

3working groups

established

7market code

dispute

2.7m supply points

planned settlement runs

unplanned settlement runs

123,005 services switched

cost of

£942k to operate the market per month

Financial settlement of around

7m transactions1

code changes considered by the Panel35

49

40

1 Transactions relate to all interactions by trading parties with the central system (CMOS), e.g. switches, meter readings, etc.

£210ma month

Market to Date

3 self-supply retailers

26 national retailers

12 regional retailers

41retailers

in the market25

wholesalers

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Market Focus April 2018 3

Digital Strategy Committee (DSC)

Last month, the DSC announced the continuation of Nick Rutherford as their enduring Chair throughout the 2018/19 financial year. This was following a unanimous vote between DSC members which showed overwhelming support of his Chairmanship.

Samir Rahim, MOSL sponsor for the group, said that the decision gave him “a huge amount of confidence in the DSC’s ability to build on the momentum they have achieved as well as providing valuable continuity on the initiatives and discussions currently in flight.”

Last month’s DSC meeting, due to take place on 15 March, was postponed in order to support

the bilaterals working group, which took place that morning at the MOSL office. The bilaterals working group is made up of DSC members, as well as a number of wholesalers and retailers who had been invited to contribute to the discussion. The purpose of the initial meeting was to gather information to inform a future business case.

The next meeting is scheduled for Thursday 20 April, at which point the Committee will look to discuss bilaterals, blockchain, the General Data Protection Regulation (GDPR) and MOSL data initiatives.

Meter App Field Trial

We are delighted to announce that Waterscan and Gauri, under MOSL’s direction, have agreed to commence a field trial of the meter reading app. Both organisations will be looking to:

6 Refine the scope of the app, whether meter read, verification service or hybrid

6 Review whether usability and user experience is simple, intuitive and fit for purpose

6 Seek proof of the technology and ascertain whether it works in field trials

6 Identify missing components to inform the preliminary roadmap

Ongoing progress reports and an exit report have been requested. The intention is for these to be reviewed by MOSL and the DSC, who will inform the decision on whether the product is a viable offering for our members in the form of an ‘additional service’.

April User Forum

This month’s User Forum met yesterday, Thursday 12 April, at The British Library.

The meeting began with a systems update, followed by updates on market design and market performance. There was then a discussion around a draft change proposal that looks at the materiality threshold of dispute settlement runs and the deadline for requesting

corrective settlement runs. Jonas Reed, Director of Strategy & Regulation at Water Plus, finished off the morning sessions by speaking about the UK Water Retailer Council, the recently formed industry group for retailers. This group is looking to discuss and promote

Trade Effluents Issues Committee (TEIC)

The TEIC held its latest meeting on Tuesday 20 March.

The main topics discussed were change proposals relating to short term consents and simplifying the current G/02 form. The Committee agreed to send these proposals for industry consultation following the meeting, with a view to

considering feedback at the next meeting on Tuesday 17 April. The Committee also considered their recommendation to the Market Performance Committee on appropriate Operational Performance Standards relating to trade effluent.

CMOS transactions (all interactions by trading parties e.g. switches, meter readings etc)

from the 2,300,281 total, approx.

28% = trading parties

72% = MOSL

March total was

2,300,281 453,712

CMOS: Apriltotal, as of 8 April

action on key market issues from a customer and retailer perspective.

The afternoon included an update from the industry-led Wholesale / Retail Working Group about their work on areas such as customer complaint reporting

and handling of unplanned events.

The next User Forum will take place on Thursday 10 May.

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Market Focus April 2018 4

Diary dates

In case you missed it here’s some key dates taking place in MOSL

APR - MAY

17 April Trade Effluent Issues Committee (TEIC)

MOSL Market Design Director, Adam Richardson, speaks at the All-Party Parliamentary Water Group event ‘The introduction of retail competition: one year on’

MOSL Board

Digital Strategy Committee (DSC)

Panel meeting

Operations and Release Working Group (ORWG))

User Forum

Market charts and Market Focus published

18 April

19 April

20 April

8 May

10 May

24 April

11 May

Feedback

We welcome your comments and suggestions on the content of the monthly Market Focus update.

Please email the MOSL communications inbox with any comments.

Chris Scoggins speaking at the Future of Utilities Summit 2018

On Wednesday 21 March, our CEO, Chris Scoggins, presented at the Future of Utilities Summit 2018 on the theme ‘One year on: how has the market performed?’, and joined a panel discussion with other industry leaders.

As we move into year two, he said we will continue to develop insight into data quality and implement a variety of tools to help improve it.

Chris also talked through some of MOSL’s key digital initiatives, including the Medium Volume Interface (MVI), Proactive Notifications and Guided Workflow, and pointed to the positive impacts they will have on trading parties’ operations and the market as a whole, by reducing market friction.

To view Chris’ full speech from the event, please click here.

Steve Arthur presenting at the Utility Week Future Retail #1 eventOn Friday 23 March, our Director of Market Performance, Steve Arthur, presented at Utility Week’s Future Retail #1 event in London.

He concluded by saying that MOSL’s focus from a market performance perspective will be on looking at where we can add the most value, on behalf of members, to end customers, and on continuing to develop performance metrics and market indicators to help shine a light on areas for potential market improvement.

Market Incident Management Plan (MIMP) Committee nominationsOn Wednesday 28 March, we issued a communication about the new MIMP Committee, which has been established by the Panel in accordance with Schedule 11 of the Market Arrangements Code. This Committee will oversee the governance processes surrounding the Business Continuity Management Framework. We will publish the date for its initial meeting, once confirmed, on the MOSL website.

The MIMP Committee currently has two vacant seats, one retailer and one wholesaler seat. The Panel has invited nominations from both retailers and wholesalers to fill these vacant seats. If you would like to be nominated, please complete the online form on the nominations page of the MOSL website. The deadline for submissions is 5pm today, Friday 13 April.

News in brief

Chris spoke about market activity over the last 11 months, before highlighting the work MOSL is supporting, together with the industry, to improve data quality.

Steve spoke on the topic ‘One year in… market development and next steps’, focusing amongst other things on the impact of the introduction of market performance charging from April this year.

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