In the first year the water retail market has been in operation, business customers switching water suppliers has been concentrated in south and south-east England and amongst larger customers, while data quality is an ongoing issue, according to a report out today.
Market operator MOSL has published its first Annual CEO Market Review to reflect on the first 12 months of the business water retail market in England, which opened on 1 April 2017.
MOSL is owned jointly by all the water companies who trade in the competitive business retail water market MOSL provides the infrastructure, information and governance services to enable customers to switch retailer and for settlement to take place between wholesalers and retailers.
There are now a total of 41 retailers active in the market made up of 25 wholesalers, 3 self-supply retailers, 26 national retailers and 12 regional retailers.
Image: Source MOSL Annual CEO Market Review
The report shows that while switching has taken place across all regional wholesale areas, the greatest activity was concentrated in the wholesale areas in the south and south-east of England. Looking at the first year as a whole, the report says that “switching activity has clearly been more concentrated amongst larger customers.”
The Review also highlights the ongoing issue of data quality, describing it as having been “a consistent theme in the early phase of the market,” commenting:
“It is widely recognised that the need for good quality information is essential to enable customers to fully participate in the market and for retailers and wholesalers to interact efficiently. Poor quality or missing data can have a wide range of impacts on the functioning of the market.”
Commenting on the root causes of market problems relating to customer identification and switching, consumption and settlement issues, the report attributes many of the problems in these areas as being “caused or exacerbated by incorrect or missing data, much of which was loaded into the central system by companies prior to market opening.”
The inaccuracy of this data, coupled with behavioural and performance variations by trading parties, is further contributing to the problems being encountered, according to MOSL..
Notable developments in the market landscape over the period flagged up in the report include:
- A growing number of national and self-supply retailers entered the market
- Retailers consolidated their market share through joint ventures and mergers
- Retail arms of New Appointment and Variation companies (NAVs) began to serve single premises or new development sites
- In some instances the retail functions of incumbent companies withdrew from the market, or declared an intent to exit.
The report says that the stable operation of the market and its central systems enabled more than 85,000 daily transactions and over 123,000 switches in the first year. During the year, MOSL also optimised the functionality of the central system and addressed outstanding requirement gaps, as well as developing a series of new, in-house digital initiatives which are currently in the testing phase.
The Review also sets out the key areas of focus for the second year of the competitive market, including the approach MOSL is proposing to take in collaboration with the wider industry to address key market issues and drive forward market improvements.
"Planned approach to address areas of the market hindering efficient operation of the market and effective competition"
“In assessing the market issues being raised by trading parties, customers, the market auditor and others, we recognise the importance of having a planned approach to addressing those areas of the market which are hindering the efficient operation of the market and effective competition.”
“To this end, we have been working throughout the first year on developing a clear understanding of the scale, nature and impact of these issues and are developing a prioritised and focused approach to driving improvement.”
MOSL CEO, Chris Scoggins, said the report marked a year both of successes and of lessons learned, commenting:
“We have deepened our understanding of market issues, and seen some encouraging results from early efforts to drive forward improvement in key areas. However, there is still much to do to make the market the best it can be. We look forward to working with all of our members and stakeholders in year two to deliver an efficient and effective market on behalf of end customers.”
Click here to download the CEO Annual Review
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