Market Operator Services Limited (MOSL) has issued its business plan and budget for 2015/16 for formal consultation with its members.

MOSL was formed by the water companies in England to work on behalf of members under the Open Water programme in the creation of a competitive market for non-household water customers which is due to open for business in April 2017.

Open Water is a programme of work that brings together all of the key organisations to design and deliver the new market by April 2017 to offer 1.4 million non-household customers a choice of water retailer for the first time. The organisations include the Department for Environment, Food and Rural Affairs (Defra), which is leading the programme, together with Ofwat and MOSL.

MOSL is a private company owned by the market participants - with membership open to organisations that hold the appropriate licenses to operate in the English non-household retail market as either licensed undertakers or new entrant retailers.

Applications for membership can be made at any time with no limit on the number of members provided they hold the appropriate operating license.

The Open Water programme is co-ordinating the development of the framework, systems and key documents (codes, processes and agreements) that are necessary for an effective market.

MOSL is responsible for delivering the operational capabilities that are needed to support the programme and the efficient operation of the new competitive market, including the creation of a ‘central market operating system’ – an IT system that will enable customers to switch between water retailers.

Business plan includes budget figure of £26.1m 

The MOSL business plan was produced following regular engagement with members, including a meeting on 16 September at which members could clarify any outstanding issues.  The business plan includes a budget figure of £26.1m for MOSL - £23.1m + £3m contingency. It also includes a sparate figure of £5.6 million of Ofwat costs and £6.4 million for OWML.

In August the MOSL Board reported that a £520,000 reduction in the final price had been negotiated with CGI Group, a leading information technology and business services provider which is supplying the central operating system.

It will deliver the IT systems that enable registration, customer switching and settlement between wholesalers and retailers. It will also design the market operator and support a range of market transition and business readiness activities.

The system will also enable business customers (as well as charities and other organisations) that are currently served by multiple water companies to have their usage data sent to their chosen retailer so that they can receive a single, consolidated bill.

MOSL is currently having to limit its commitments in the event that it is not confirmed as the market operator. Chairman Andrew Pender told the September meeting that not being confirmed as market operator was having a financial and operational impact - for example, on MOSL’s ability to acquire long-term premises and engage permanent staff.

If MOSL is confirmed as the market operator, the projected annual cost of MOSL post market opening in 2017 is likely to be in the order of £7.6 million to £9.2 million. MOSL is planning to bring forward more detailed proposals for the costs of operating the enduring market operator in 2016/17.

Programme "likely to become increasingly visible to general public"

In response to a comment on finances to the effect that a cost of £2 million of communications and engagement (8%) “seems high” MOSL said:

“Regarding communications, MOSL needs to coordinate its activities and manage progress and risks with 40+ organisations across a complex stakeholder environment on a programme that is likely to become increasingly visible to the general public.”

MOSL is currently using partners rather than recruiting, including using a project management company who MOSL hopes to become a partner with shared risk and reward. Contractors are being used for programme roles.

Central operating system solution "exceptional value"

In response to a question as to whether MOSL had got value for money from the central operating system, attendees at the meeting were told that it was a competitive procurement and that from previous experience, the solution “appears to be exceptional value.” CGI is working on a fixed price contract delivering to a fixed scope.

Attendees also heard that timescales are tight but that MOSL is planning on the basis of meeting the timescales and making it happen – and that “everyone needs to ‘get over the line’ at the same time for the programme as a whole to be a success”.

A general meeting is set for 15 October at which members will be invited to approve a special resolution agreeing the plan and budget.

Click here to download the MOSL Outline Business Plan 2015/16