Market Operator Services Limited has published its response to a request from the Chief Executive of Ofwat, Cathryn Ross for assurances that MOSL has the capability and capacity required to fulfil its function.

The response, dated 24^th November,  was in reply to a request back in July from Ofwat for assurances that MOSL had the necessary capability and capacity required to fulfil its function.

In a six page letter, Cathryn Ross said that Ofwat had collectively planned that MOSL will pick up the key work associated with:

• Finalising and base-lining the market documents;
• Procurement of the central IT system, including building and testing that system;
• MOSL Governance and MO establishment; and
• Market readiness and company engagement.

Cathryn Ross asked:

“Please can you provide assurance from MOSL's board that it is ready to undertake these activities to provide comfort to the Ofwat board as soon as possible.  In particular that MOSL has the appropriate capability and capacity in place to undertake this important work, that its systems and processes are sufficient and that it is able to adequately represent the interests of both incumbents and new entrants evenly in the development of the new market.”

In its response,  Ben Jeffs Chief Executive Officer at MOSL said:

 “Following the successful transition of activities from OWML to MOSL in August 2015 and the endorsement of our plan, I am pleased to be able to provide assurance to the Ofwat board that MOSL has the capability and capacity to fulfil its functions.”

“We remain on track with delivering the critical actions set out in our plans in support of the opening of the market in April 2017.”

On governance and establishment of the enduring market operator MOSL said it has established robust governance arrangementsduring mobilisation,  including the establishment of a full board of directors, commenting:

“The board ensures that MOSL acts in the interests of its members whilst remaining independent of its members, conducting its work impartially and without undue influence from any group or individual member.”

MOSL is working in partnership with Defra to clarify that HM Treasury will consider an enduring market operator based on the MOSL model as a private corporation. The organisation is currently reviewing its Articles of Association to ensure that they are fully consistent with those of a private corporation in order to provide confidence to all parties that there are no constitutional barriers preventing MOSL from becoming the enduring market operator.

Market readiness and engagement

On market readiness and engagement, Ben Johnson said MOSL was continuing to support companies in making the necessary preparations to meet the technical market requirements.

In addition to the Workplan Review Group, an existing  engagement  forum for market participants, MOSL has also established an additional Systems Ready Forum to provide technical experts within market participants the opportunity to understand and influence the design of the Central Market Operating System. Ben Johnson said MOSL was “committed to giving market participants the information they require as soon as practicable.”

In addition to the Open Water website MOSL  is creating a ‘project’ website to improve information flows between all Open Water partners and market participants. The market operator said it is also expanding the opportunity for market participants to engage in constructive dialogue with MOSL by implementing a cloud-based collaboration service called Podio.

Commenting on priorities for the future, MOSL has asked Ofwat to “note the feedback” it had received from members about the importance of resolving the outstanding policy issues at the earliest opportunity to inform their planning and systems preparations.

MOSL: Ofwat should consider steps to ensure companies are ready on time

The letter says that MOSL recognises that each market participant is accountable for ensuring its own readiness to participate in the retail market.

However, Ben Johnson concluded his letter by asking Ofwat to consider any additional steps the regulator could  take to ensure that all companies are ready on time,  highlighting the importance of data quality, both in terms of completeness and accuracy, in ensuring the correct functioning of the market.

MOSL  said it was also essential that all companies have effective processes in place at market opening to resolve any data quality issues that impact a customer’s experience in an acceptable timescale, commenting:

“Experience from other sectors and the opening of the Scottish market highlight the critical importance of this issue relative to all other matters and the Data Pilot in May further illustrated the need to address this within the English market.”

Design phase completion is first major system milestone

In September 2015, MOSL appointed CGI Group to build, test and operate the Central Market Operating System (CMOS) on a five-year contract.

Confirmation on Friday by MOSL of the completion of the design phase that will be at the heart of the competitive market for non-household water customers when it launches in England in 2017 marks the first major milestone of the core ‘central market operating system’.

The completion by MOSL’s key technology partner CGI Group is the culmination of many weeks’ detailed work and a series of workshops with participants to resolve outstanding issues and agree the functional design, including some of the initial screen designs that trading parties will use.

MOSL members agree mechanism for covering the upfront costs of any code changes

MOSL’s budget for the 2015/16 financial year was approved unanimously by its members on 15 October. This secured £14.6 million of funding for the current financial year, including £2.1 million of programme contingency. The budget also included a forecast of expenditure for the 2016/17 financial year, which will be presented to members for their approval in early 2016.

On finalising and base-lining the market documents, MOSL  said it had established a ‘Design Authority’ to act as the custodian of the market codes, together with implementing an efficient and effective change control process to process change proposals. The mechanism has been approved by the Interim Codes Panel which has now met six times and considered 17 change proposals to date.

In Its business plan MOSL had recommended strongly the importance of avoiding, as far as possible, any system impacting changes after 30 September 2015 in order to deliver the core systems on time. MOSL’s budget for 2015/16 does not make allowance for the cost of such changes.

Since 30 September there have been a few change proposals with more expected as companies engage with the system and market processes and in response to the resolution of the outstanding policy issues.

MOSL members have agreed a mechanism for covering the upfront costs of any code changes that are considered essential for the effective operation of the market using unallocated contingency funds set out within the business plan. MOSL said this provided a short-term, expedient, cash buffer that will need to be topped up periodically so that it remains available for genuine contingency purposes.