Open Water: Reflections on the First Year

Open Water Market

As reported previously, Bridgeall played a key role in the successful launch of the deregulated Open Market for commercial water in England which came into effect on the 1st April last year (see Bridgeall’s Deep Water Knowledge Delivers Certainty for English Water).

Working closely with CGI, we successfully launched the Central Market Operating System (CMOS), the system underpinning what is now the world’s largest competitive water market.

CMOS sits at the heart of the new market. It enables customers to switch between suppliers and acts as a central market transaction and settlement system, calculating usage charges between wholesalers and retailers, enabling retailers to charge customers and wholesalers to recover their regulatory income in a market expected to generate revenues of £2.4 billion per annum.

Bridgeall was responsible for developing the settlements sub-system underpinning CMOS.

One Year On

With the Open Market celebrating its first birthday, Utility Week magazine has published a review of how the first twelve months have gone based on the views of key market players including chief executives of water retailers, the Consumer Council, MOSL, Ofwat and others.

While a range of opinions were expressed, the overall consensus is that the first year has been very successful with some outstanding issues still to be resolved. This is not surprising given the scale and complexity of the sector.

“Many of the concerns aired about market mechanisms and other arrangements before the market opened have materialised in some form or other. But such teething issues are the norm for any new market and should not be blown out of proportion as indicators of market failure. The general feeling in the industry is one of optimism.”

Key point summary:

  • The market opened on time, without much drama. This was a monumental achievement by all market participants who should be congratulated.
  • 25 companies have been granted water retail licences (including sewage) but only 15 are actively operating.
  • 112,155 supply point switches have taken place, representing 4.5 per cent of the estimated 2.6 million supply points in the market. More could be done to highlight the benefits of switching for SMEs.
  • Many customers are already benefiting from improved choice and lower prices, especially large multi-site operators.
  • While the separation of retail and wholesale has worked well, billing inconsistencies have arisen which need to be resolved.
  • The paucity of data quality across the industry is a problem for retailers who have placed accurate billing at the centre of their offering to customers. Addressing this issue is critical.
  • Some retailers need to raise their game in terms of customer service.

In conclusion, a strong foundation has been established for building an open, competitive commercial water market. The challenge now is to resolve issues relating to data quality, accurate billing, customer service and SME market awareness.

You can access the full article here (registration may be required) – Water Retail Market: Reflecting the First Year.

Please see here for previous blog posts covering the Water Sector.