Retailers have flagged up some of the challenges they face in collecting the data Ofwat needs to monitor how the retail business market is working – and suggested that the performance of wholesalers should also be considered when analysing the information submitted by retailers.

The comments came in the first meeting of the Retailer Data Working Group set up by the regulator to consider the data it wants the retailers to provide – with some retailers asking for clarification of why Ofwat needed to collect the information and why in particular the specific data set is collectable through the retailers.

Ofwat explained that as it has a statutory responsibility to ensure the market is working well, a tool which will help do this is monitoring the market through data from market participants, some of which only retailers will have sight of.

However, the retailers have insisted that most of the information can be taken from MOSL rather than them and again questioned why the regulator needs the information and how it intends to use it. Retailers have also questioned the intended frequency and timing of the data they will have to provide.

Key issues in identifying micro-businesses and multi-site customers

The discussion has highlighted some of the challenges currently facing the retailers on data collection for both micro-businesses and multi-site customers.

The majority of retailers in attendance confirmed that they have no mechanism in place to identify micro-businesses – key issues include:

• Volume of customers – some retailers have over 100,000 customers through exit transfers and have inherited no information on the size of the business or employees.
• Proactive contact – retailers challenged Ofwat on the costs and resources required to proactively contact all its customers to identify if they are microbusinesses.
• Keeping the information up to date – retailers discussed the resource required to keep the information they do gather up to date, as business headcount be very fluid.

Options available include confirmation by retailers for all new customers they will gather information to identify whether they are a micro business or not.  As a possible short term solution,  it was agreed that it was easier for retailers to identify large businesses and report micro-businesses by default, with a caveat that the number given has certain exceptions.

Some retailers have decided to use the Customer Protection Code of Practice as a guideline for all customers and assume every customer is a microbusiness unless they know otherwise.

The retailers said for similar reasons it would also be difficult retrospectively  to collect information on  multiple SPIDs (Supply Point Identification Number) grouped under a single multi-site owner, although they would be able to collect it moving forward.

According to the Minutes, Ofwat has acknowledged it would take time for such improvements and trends to evolve in the market and companies dataset and that “this should improve as retailers got to know their ‘new multisite’ customers in more detail.”

Understanding scale and impact of TPIs a key issue

The majority of the retailers at the meeting agreed the importance of understanding the scale and impact that Third Party Intermediaries (TPIs) would have on the market.

Some suggested that this would not capture the full impact of TPIs who may engage in activities that retailers were not party to, or unsighted on.

In response to the suggestion by retailers that Ofwat needed to ask for more powers to regulate TPIs, the regulator said it would need the evidence that only retailers could supply to support this if it decided to pursue the issue.

Ofwat said it that while is aware that visibility may not always be possible or difficult, gathering intelligence on TPIs is the first stage in considering whether regulatory intervention is necessary.

Retailers unwilling to share business-sensitive pricing structure data

A number of issues came out of the discussion on tariffs, including:

• Definition – majority of retailers did not relate to the word tariffs and suggested this should be changed to prices.
• Business sensitive – most retailers were not comfortable sharing pricing structure which are business sensitive and not in the public domain.
• Volume – most retailers suggested they could have many different pricing structures and therefore it would be resource intensive to list all these

Ofwat explained that understanding the nature of tariffs offered by retailers was vital to both determining if the market as a whole was delivering benefits to customers.  

However, there was no suggestion that there was a ‘right’ or ‘wrong’ tariff structure and individual tariff data would not be published.

The regulator has confirmed that the intention is to collect data at the end of the first year of market opening, saying it would continue to refine the details of the data request over the coming weeks.

The retailers were also keen to setup a mechanism for highlighting issues to Ofwat, including data issues with MOSL and wholesaler issues. Some retailers want to ensure performance of wholesalers was considered when analysing the information submitted by retailers.

Ofwat will now consider whether a formal mechanism is needed -  in the meantime, retailers will be able "to bring forward issues on an informal basis to Ofwat as and when they feel necessary."