Water industry regulator Ofwat has unveiled its latest plan for market opening in 2017 after a proposal for the Water Industry Commission for Scotland to oversee the programme was turned down by the WICS Board in January.

In July last year Ofwat’s plans to deliver the new arrangements months via the creation of Open Water Market Ltd were revised after Ofwat and the High Level Group established by the UK Government to prepare for the new retail market opening in 2017, came to the conclusion that “Open Water Market Ltd will not provide the right model to deliver the necessary work needed to open a retail market in April 2017.”

That decision came only six months after Ofwat had announced the creation of Open Water Market Ltd to deliver the new arrangements.

Outlining the detail of this latest plan in a letter to Managing Directors of the water companies, Ofwat chief executive Cathryn Ross explained that Ofwat has now appointed a new director for the opening of the non-household retail market who will be accountable to her when he takes up the post in early March.

The letter flags up the constraints on Ofwat as a public body which mean that any work (whether undertaken directly or through another party) must be undertaken in line with the controls placed on it by HM Treasury and the Cabinet Office. Putting this latest development in context, Cathryn Ross told the Chief Executives:

“It is my role as Ofwat’s Accounting Officer to ensure our compliance with these. To commercial companies I appreciate that these may from time to time appear unduly onerous and complex.”

The letter is light on the detail as to why the the plan for WICS to act as the market operator has been abandoned. Cathryn Ross said that although Ofwat had envisaged that it would reach an agreement with WICS that would enable them to become the delivery partner "in order to provide continuity and allow it to continue to benefit from the Scottish experience", this had “not been possible.”

Ofwat has now asked the board of OWML to retain its responsibility for driving MAP3 to successful delivery and to produce a comprehensive suite of market documents by the end of May 2015, including  a wholesale and retail code, market arrangements code and draft wholesale contracts.

The regulator has also asked the board of OWML to complete its work in producing a set of business requirements by the end of April 2015 for the central IT systems that will support the competitive market. Market Operator Services Ltd (MOSL), a private company set up by Anglian Water, Northumbrian Water and United Utilities, will procure the central IT systems on the basis of the OWMLspecification. Cathryn Ross said that Ofwat expects MOSL to become the market operator in due course.

In addition, Defra and Ofwat have asked OWML to procure an assurance framework, which will be used by Defra and Ofwat to gain assurance that the non-household retail market will be ready for competition on time.

MOSL will be expected to make use of the assurance framework to satisfy itself and others that its work will effectively and efficiently contribute to the opening and operation of the non-household customer market, both in its procurement of the central IT systems and its development as the market operator.

In terms of governance, Defra, Ofwat and WICs (and in due course MOSL) will continue to have regular Retail Market Opening Management Group meetings.

Cathryn Ross is now planning to commission independent ‘gateway’ reviews at key milestones to help ensure that effective programme management arrangements are in place. The first of these will take place as soon as possible.

Ofwat will also separately be looking to appoint a delivery partner on commercial terms to support it in its regulatory work for market opening.

The letter to the Chief Executives concludes

“I look forward to hearing from you whether I can count on your support.”