Challenges in the Competitive Water Market

As momentum gathers apace towards 1st April 2017, when non-household customers in England will be able to choose their water supplier, all water companies are readying themselves for the competitive market. Attention has to be rightly focused on the market processes and obligations and the consequent impact on company culture, internal teams, processes and systems.

Experience from the competitive market for water in Scotland since 2008 and the UK electricity and gas markets in the UK from 1998 shows that market processes and data transactions will change every 6 months. Whilst system reliability is a given, flexibility and agility are also key for efficiency.

Data quality in these markets has presented challenges and will do so again in the English water market. In a faultless world the data within a Wholesaler/Retailer will match perfectly with the Central Market Operator Platform (CMOP) view of that data. In practice the 2 views will drift apart for a whole range of reasons. When data does drift then expected vs actual settlement will differ and may result in significant financial exposure for the Wholesaler/Retailer. Similarly, issues will arise with compliance and resultant penalties from the Market Operator (MO), and their reputational impact, will be very important for senior executives.

An enlightened water company must maintain and understand its’ own internal “market view” of data and know and understand the differences with the MO view. Validation of settlement invoices received monthly from the MO must be undertaken and data corrected using market data transactions so that differences are resolved before the settlement window crystallises further down the line.

Readiness plans should not just be focused on market opening but ought to be about envisioning and delivering an efficient business operation supported by a flexible systems platform.