Ofwat has confirmed that the modification of the water companies’ conditions of appointment to include a readiness condition ahead of the opening of the new retail market in England in April 2017 is now in place.

The introduction of a readiness condition creates a legally enforceable obligation, supporting the programme requirements around preparation and loading of data and other preparations for shadow operations as well as the Open Water Assurance Framework.

The condition requires all licensees and appointees whose areas are wholly or mainly in England to support the testing and trialling of the new market and also to take such steps as are within their power to ensure that they themselves are ready.

The scale and nature of preparations required is largely determined by the number of eligible premises for which an appointee or licensee holds data and the business strategy that the appointee or licensee wishes to pursue.

Ofwat said the readiness condition will help to ensure that the market opens on time and can operate effectively by creating an obligation on industry participants to take preparatory steps.

The regulator said:

“While we recognise that companies, both individually and collectively, believe that there are already incentives in place to ensure those steps are taken, we believe that without a formal obligation there is a risk that a small number of companies rely on the actions of others.”

According to Ofwat, the failure of one or more participants to take the preparatory steps and to be ready could delay the opening of the entire market, particularly if that failure prevents the company concerned from interacting with the market systems, making it difficult for customers to switch.

The condition will also create collective confidence amongst industry participants and will send important signals to companies that other companies are taking the steps they need to support effective market opening, Ofwat said.

It would also create confidence amongst customers by sending an important signal about the industry’s collective commitment that the retail market will be ready on time.