Ofwat upbeat for business retail despite independent amber/red assessment

Ofwat has insisted it is confident work towards both shadow and full business retail market opening is on track despite the programme getting an amber/red assessment from a group of independent reviewers. The rating means: “Successful delivery of the project/programme is in doubt with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed, and whether resolution is feasible.”

The report of the independent review – the second of a potential three such exercises – was completed in April. Underpinning the more negative assessment this time around (the reviewers gave the programme an amber rating last time) were the shortage of time before April 2017 and the fact that success hinges on so many stakeholders. According to the report: “Success depends on many actions by many parties – the central system building, the codes defining market behaviour, the licensing and the exit processes, and the readiness of market participants to engage – none of these is without challenge. A number of major tasks still lie ahead and the efforts of a large number of participants have to be marshalled and coordinated.

“The focus on the delivery of the central systems has dominated the programme for much of its life; it continues to be demanding but attention is now moving to the readiness of market participants. There is still much to be done in this area. The timetable has little if any flexibility to accommodate delay or disruption or lack of clarity in any of these areas and there is no contingency plan.”

The review panel made 14 specific recommendations, half of them critical, which means immediate action should be taken.

Responding on 22 July on behalf of all three Open Water partners (DEFRA, Ofwat and MOSL) , Ofwat’s senior responsible owner for the retail market opening programme Adam Cooper said: “Overall, I consider that the programme is able to address the recommendations quickly and in a satisfactory way.”

Speaking to THE WATER REPORT, Ofwat’s principal economist, Tim Griffiths, pointed to a number of positive actions that have been taken or changes made in the three months between the completion of the review and the Open Water response. These include: MOSL moving its programme status from red to amber

; clear interest in the market from outside suppliers (specifically, the Business Stream and Castle Water deals to buy respectively Southern Water and Thames Water’s non household customer books); progress on communications activities including plans to relaunch the Open Water website as a practical tool to inform customers; progress on assurance activities; and contingency planning for a range of “what if” scenarios.