Open Water has published the third draft iteration of the market architecture plan (MAP3) setting out in more detail the procedures  which will govern the interactions between wholesalers and retailers in the competitive retail market for non-household customers when it opens in April 2017.

Open Water has been charged by Government to coordinate the development of the market rules, framework and systems required for an effective non-household retail market.

The technical documents, which set out the detailed processes that underpin the third iteration of the Market Architecture Plan (MAP 3), are a substantially complete set of the codes, agreements and processes required to underpin the expansion of retail competition in England. They build on progress made in MAP 2 and have been informed by extensive industry consultation.

A number of the documents are second iterations, which have informed by written consultation and a suite of workshops with market participants. Where changes have been made to the last iterations which were published with MAP 2, a tracked change version has also been included for information.

In an overview paper introducing the technical appendices, which consist of 75 separate and detailed documents in total, Open Water commented:

“The material set out in the various technical appendices published today, together with an update on the initial data upload requirements which we will publish later this week, provide a stable basis that will be crucial to supporting company readiness preparations.”

Ofwat review of credit arrangements has significant implications for market

Open Water had intended to publish MAP 3 in full – however, as a result of Ofwat’s announcement of  its intention to review the credit arrangements and payment terms that had been discussed at the Open Water workshops, it has not been able to develop and publish a cover paper setting out key messages for Boards and supporting chapters. Open Water commented:

“The implications of these changes are significant for both wholesalers and retailers and may change the way in which the market operates. In the light of these proposed changes it was not possible to write the more strategic chapters for MAP 3. The issue of credit terms influences many aspects of the way the market would work including tariffing, financing and funding the retail business and the supplier of last resort arrangements.”

The technical appendices published include:

• The wholesale-retail code;
• The wholesale contract;
• The market arrangements code;
• The draft assurance framework; and
• A document highlighting issues that companies may want to consider in assessing their readiness (these tests could typically assist a company in meeting the requirements of the assurance framework).

In February 2015, Ofwat Chief Executive Cathryn Ross wrote to water company chief executives to let them know Ofwat planned to shift responsibility for those areas of market opening being managed by Open Water Market Limited (OWML) to either Ofwat or Market Operator Services Limited (MOSL).

The expectation is now that MOSL will be responsible for all the areas previously managed by OWML with the exception of:

• Programme planning;
• Business customer engagement; and
• Some aspects of the assurance framework.

All other areas are currently expected to become the responsibility of MOSL at the end of May. Responsibility for the following areas of work will be added to MOSL’s current responsibility for the design and procurement of the central systems:

• Establishing the market operator;
• Codes, processes and procedures;
• Company readiness and engagement;
• Aspects of assurance relating to the market operator activities; and
• Design authority.

MOSL is now expected to be responsible for the workshops scheduled for the beginning of June and the delivery of the MAP (pre-vendor appointment recommendations) and the final draft of the MAP (post vendor input). Open Water is now seeking further comment on the documents, with most companies expected to attend the ‘page-turning’ workshops to provide their input to the codes which will govern the market.

Open Water said that points made would have to be substantive and focussed on the real issues of substance as there is a need "to turn around a revised version on 14 July" to support the appointment of the vendor for the central systems, commenting:

“There is much to be done to prepare for the June workshops where, especially given the extent of the consultation that has already been undertaken, the focus has to be on closing down the drafting process. Companies too have an important role to play in facilitating this ‘close down’.”

“Crucial that MOSL makes quick progress in developing resources”

Open Water and MOSL now appear to be operating to increasingly tight deadlines – the overview states:

“It will be particularly important that the July version facilitates an effective dialogue with the vendor both before and after the contract negotiation. There is a risk that the systems may not deliver the required outcomes if this dialogue is not fully effective. The work plan still includes an expectation that this will all have been completed by the end of September.”

“It is also crucial that MOSL makes quick progress in developing the resources to add support to individual companies’ efforts to ensure that they are ready for market opening. Experience from Scotland suggests that such readiness support is important to an orderly and effective market opening.”

The procurement process for the central IT system needed to underpin the market operation mechanism started in March, when Open Water envisaged that a contract would be entered into in August 2015. To date no announcement has yet been made with regard to the appointment  of a supplier.

Click here to download the Technical Overview

Click here to access the full suite of MAP3 Technical Appendices