Chris Scoggins, Chief Executive at market operator MOSL, has said that “the grace period is over” for the retail water sector and it would no longer be acceptable to customers, politicians or the regulator to say “we are in a new market and need more time to get things right.”

Reflecting on the first year of retail water sector competition, the MOSL chief told delegates at the recent Future of Utilities summit that 11 months into the market, more than 112,000 SPID switches had taken place, representing a switching rate of over 4%, or 10% in volumetric terms. 

MOSL is due to report on the final full-year scores this month.

Switching activity has been concentrated in the South and South East of England. Scoggins pointed out that customers’ renegotiations with their existing suppliers are also an equally important measure of engagement that is not reflected in the switching figures.

Out of a current total of 41 retailers in the market, 26 are national retailers. Since market opening, 4 new national retailers have entered the market, with 4 more on their way to doing so. Many of these are either new or small players, and yet to be widely active, small out of area NAV arms, or intermediaries.

The MOSL CEO commented:

“It is positive to see a range of business models competing successfully and providing choice to customers in the market, from large national suppliers, to small and nimble disruptors, from specialist intermediaries to customers who have decided to become their own retailers.”

The interest in self-supply had also been a noteworthy development, he said, which had exceeded the expectations of many, with more on their way to entering the market.

This month sees the introduction of charges for underperformance by wholesalers or retailers against the Market Performance Standards which apply to wholesalers and retailers. Next year, MOSL will also be considering the potential introduction of charges against the Operational Performance Standards which apply to wholesalers only.

In addition to the introduction of charging, next year MOSL will also publish information about how companies are performing against the standards.

“Making performance information publicly available in future should be an additional incentive to companies to adopt the right behaviours to avoid any negative reputational impacts.” Scoggins said.

One of the market operator’s priorities for next year will be to support the Code Panel to look at strategic market opportunities, including a potential review to make the codes more accessible to all and help reduce barriers to entry.

Data quality is key to managing market issues

Chris Scoggins identified the importance of data quality as a common theme across a range of issues, saying:

“Data quality is such a major issue because the commercial and experiential impacts it has on the market and end customers are significant.”

Work to date by MOSL on data quality has included the delivery of some new indicators looking at data quality. The number of service points where missing or incorrect data meant that financial settlement couldn’t be calculated – known as ‘user exceptions’ – had halved and is on a continued downward trend. However, while some encouraging signs had been seen in the first year there was “clearly more to be done.”

Looking ahead to year two, Scoggins said MOSL would continue to use its position at the centre of the market to “shine a light on companies’ data and use a variety of tools and levers to improve it.”

The market operator is planning to ensure that efforts are prioritised in the areas where data is causing the most friction for companies in delivering the levels of service expected of them by their customers. MOSL’s forward plan for data quality improvement is being finalised and is due to be published in due course.

The areas that have been identified and agreed as high-priority by trading parties are those which will improve customer identification, switching experience and settlement accuracy, including:

• Uploading historical meter reads into the system
• Improving estimated consumption data to cover for where meter reads are not present; otherwise known as 'Yearly Volume Estimate (YVE)'
• Improving pairing of water and wastewater services for customers’ premises
• Improving asset information to enable meters to be found, identified and read in a timely manner.

Chris Scoggins said MOSL would use a variety of tools to drive improvement, ranging from hosting market forums and discussions to share information and ideas about data quality improvement, through to the publication of data trends and insight.

Bilaterals communications could significantly help reduce market friction

He went on to flag up bilaterals – the communication between wholesalers and retailers in the market that do not pass through the central system - as one example that could significantly help reduce market friction. Currently, it can be very time consuming, costly and complex for trading parties to have to interoperate with a number of different systems and specifications outside of the central system.

MOSL is working with members, through the work of the Digital Strategy Committee, to look at solutions for greater uniformity and standardisation in this area.

“We’re also keeping an eye out for new technologies that could play a role in the efficient and effective operation in tomorrow’s market, such as blockchain, apps and data verification technology to improve data quality at source.” he added.

Year one – “the grace period is over”

Describing year one as “an unusual year in many respects” , and “a year of the market finding its feet”, Scoggins said that “the grace period is over.” Moving forward, he concluded,  it would not be acceptable to customers, politicians or the regulator to say:

“We are in a new market and need more time to get things right.”

“It’ll be about doing things right first time, every time. The market will only be a success if it delivers on its promises for customers.”