Non-household retail competition

1. Non-household retail competition Presentation to IoW Eastern Area 8th May 2014 Paul Fry, OpenWater

2. The story so far … 2011 Department for Environment, Food and Rural Affairs (DEFRA) Water for Life (published 2011), Draft Water Bill (published 2012), Water Bill (published 2013) DEFRA, Welsh and Scottish Government, Ofwat, WICs, Industry CEOs and customer representative 2012 Programme reporting to the HLG and responsible for market design and implementation 2013 2013/2014 OpenWater led industry working groups to help shape the recommendations Jan 2014 Open Waters first version of a recommended market design published Jan-Apr 2014 Full industry consultation on the Market Blueprint v1 OpenWater led industry working groups to help shape the recommendations May 2014 More to do!

3. What is retail competition? The incumbent companies who presently manage all parts of the supply chain for most customers will continue to provide wholesale services and retail services. New entrant companies will be allowed to enter the retail market All non-household customers will be able to choose the retailer from whom they buy their water and sewerage services

4. Wholesalers Retailers Market Participants Market operator Facilitators & operators Customers Government Regulators

5. What choices should customers have? Customers should be able to choose their retailer for each separately delivered and measured service type at a premises If service types are not separately delivered customers should be able to choose separate retailers at the grouped services level We expect a range of specialist and bundled retailer offerings to emerge

6. Key interactions in the water and sewerage markets Retailers and wholesalers will continue to have licences and will be required to sign up to market codes, as will the MO Customers will contract with retailers, who in turn will contract with wholesalers A customer’s primary point of contact will be with their chosen retailer(s). A new market operator (MO) should provide services which help make the market effective. This includes managing most data exchange between participants Retailers Regulator Market operator Customers Premises and meters Wholesalers Service flows Customer will make payment to retailers, who in turn will pay the wholesalers, based on payments calculated by the MO Wholesalers will be responsible for water and sewerage infrastructure and ensuring physical services are available for customers. Retailers will provide customer service Contracts Data/communication flows Financial flows Licence and code obligations

7. Registration and switching strategy Customers should be able to choose their retailer for each service type at each premises. If they choose to switch they should apply to their new retailer, either directly or through an appointed intermediary, and enter into a contract with the retailer The new retailer should initiate a switch request. Industry standard processes should manage objections from the current retailer and necessary customer protections. The MO should manage most data exchange New retailer Market operator Current retailer Customers Premises and meters When the switch is complete the MO should update a central register of service points which it maintains, and inform wholesalers if necessary. The central register will be developed top-down to produce a single record of the constable premises and service points Wholesalers The new retailer should be responsible for obtaining a switching meter read, which is communicated to the current retailer through industry processes. The current retailer should then issue a final bill which the customer then pays Contracts Data/communication flows Financial flows

8. Financial settlement strategy Retailers should read meters and inform the MO of meter readings Retailers Once a month the MO should determine charges due for each daily settlement period, including estimating consumption in the absence of meter readings Market operator Customers Premises and meters The retailer should then make payment. Credit or cash should be posted to mitigate liabilities Wholesalers The whole process should be repeated after 2, 8 and 13 months to resettle for each settlement period Wholesalers should inform the MO of operational services they have provided The MO should advise the wholesaler of charges due. The wholesaler should then invoice the retailer Data/communication flows Financial flows

9. Operational services strategy Retailers will be responsible for communications with customers. Wholesalers when on site will be able communicate directly to customers Retailers Operational services requests and notifications should be communicated between market participants through the MO as far as possible. Some non-standard communications may be bilateral Market operator Customers Premises and meters Wholesalers A catalogue of operational services provided across England should be created, and we will seek to make consistent the definition of services Service flows Data/communication flows

10. Key interactions in the water and sewerage markets Retailers and wholesalers will continue to have licences and will be required to sign up to market codes, as will the MO Customers will contract with retailers, who in turn will contract with wholesalers A customer’s primary point of contact will be with their chosen retailer(s). A new market operator (MO) should provide services which help make the market effective. This includes managing most data exchange between participants Retailers Regulator Market operator Customers Premises and meters Wholesalers Service flows Customer will make payment to retailers, who in turn will pay the wholesalers, based on payments calculated by the MO Wholesalers will be responsible for water and sewerage infrastructure and ensuring physical services are available for customers. Retailers will provide customer service Contracts Data/communication flows Financial flows Licence and code obligations

11. Systems architecture and data model Systems Architecture: To enable the MO to deliver its defined services IT systems will be required, e.g. a registration system and database; and a charge calculation system Industry data exchange hub interface approach: three tiers of interface Retailer / Wholesaler Market operator Machine-to-machine interface: for high volumes IDEX Interface Automated IDEX Interfaces Semi-Manual IDEX Interfaces Data Preparation Systems Manual file up/download: for low volumes and/or as contingency Manual IDEX Interfaces Manual webforms: for very low volumes and/or as contingency Functional Systems Data model: The data model for the market, and for the MO in particular, includes centrally held records of: premises, service points, and associated meters and market participants; service requests and notifications; and meter readings, wholesale charging schemes, and derived wholesale charges. The central data model will not hold customer-level data.

12. DATA £ £ DATA DATA DATA CUSTOMER CUSTOMER Market Operator Market facilitation Financial Settlement Registration Financial Settlement Produce wholesale charging reports for retailers and wholesalers Meter Readings Premise Details Usage Data Supply Point Details Reports Meter Details Customer Switching Wholesale Providers Retail Providers Inter Company Data Exchange Financial Settlement Invoicing, payments and collections Retail Providers Who the retail service providers are for each supply point Meter Reading Periodic Readings Switching Reads Move In/Out Readings Wholesaler Retailer Retailer Wholesaler Customer Switching The customer choosing to change retailer Meter Asset Details Serial Number Asset Attributes Location Premise Details Address Rateable Value (RV) Classification etc Wholesale Providers Who the wholesale service providers are for each supply point Supply Point Details Water services Waste Water services

13. Questions