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Change is A-Coming!


While patience is a virtue, most would agree that there’s a cut-off point at which ‘wait and see’ becomes ‘get on and get it done’! Two and a half years into our open water market, both industry regulator Ofwat and market operator MOSL have reached that point – and who can blame them?

There’s a highly positive feeling in the air amongst many water industry parties of late. A feeling that there’s about to be a gear change in the pace of progress.

Water’s leading ladies – Rachel Fletcher and Sarah McMath, the Chief Executives of Ofwat and MOSL respectively – are sending strong signals that they will no longer accept poor performance and reluctant relationship building – from any market participant. Although they may not be surprised at the state of affairs, they’re demonstrably disappointed – shocked even – at the level of mistrust and friction between trading parties. How could they have envisaged that there would be parties that seemingly want to block progress?

Friction has been an obvious and common theme in research and reports on market performance since opening in April 2017; but what’s not been obvious is any solid evidence of why these frictions exist and why they’re difficult to resolve. So, we have situations where customers still suffer long-unread meters and inconclusive wholesaler/retailer interactions, effectively preventing them from exercising their customer power. Left out in the cold, stuck somewhere between their incumbent retailer, their potential new retailer and their wholesaler, it’s no wonder that many organisations feel a general apathy towards water procurement, and this must change if we are to build resilience into our national supply.

The current positions being adopted by Ofwat and MOSL under Rachel’s and Sarah’s leadership should kick-start the step change required. They’ve both made it very clear that customers are the most important thing in this market, and they’re determined to make it work well.

What’s more they’re leading by example, inviting underperforming parties to follow their lead. They’re fully immersed and proactively approaching everything with an open mind. They’re looking at everything from a customer perspective. They’re recruiting expertise from a wide variety of areas to breathe life into innovation. They’re talking, engaging, collaborating. They’re not looking back and getting tied up in preconceptions but, instead, looking forward.

MOSL even delayed the publication of its strategic business plan until Sarah had conducted a rigorous root and branch interrogation of the market, taking time with all trading parties to hear all the issues and taking a step back before moving forward to consider what the market needs now. This is noteworthy because MOSL’s role in the lead up to market opening is quite different to its future role: to pause, respond to evidence and re-evaluate its role has been an important and necessary step in its evolution.

Ofwat too is listening hard, dealing with any excuses that stand in the way of progress and taking bold action to remove any potential barriers to effective collaboration (lifting the cap on net margin to free up water company resources to invest and innovate, for example). The regulator has also written to wholesalers confirming that it is no longer prepared to accept any behaviour that blocks market development and demanding a clear action plan to address the areas where they are falling short.

Critically, Ofwat is talking tough too. The content and tone of their communications has taken a much stronger stance of late, stating unequivocally that it will not accept the status quo and that it will use its full regulatory powers to drive the actions it deems necessary. We have already witnessed some well-publicised fines for underperformance and anti-competitiveness and these instances could well increase in frequency.

It’s not as bad as it may seem. In our view, there’s a real disconnect across the market with some trading parties acting collaboratively, flexibly, investing and starting to innovate. Others are not. And, while there remain pockets of issues around meter reading and data quality – the fundamentals of a functioning market – it’s difficult to see how the whole market can raise its game collectively and achieve what it set out to do.

We wholeheartedly support the stance that regulator and operator are now taking to address the inherent issues. If anything, we’d like to see some harsher penalties to ensure that some parties focus on the key areas that they are currently ignoring (such as long unread meters) and a non-negotiable deadline for the rectification of these. Successfully opening the market on time is one thing; making it fit for the long-term future is quite another. This will require strong foundations: customer focus, dependable systems, clear data and a willingness to succeed.