Big bang market opening planned but enduring role for MOSL by March

Most elements of the market framework for non-household retail will take effect at market opening rather than before, though the process to appoint MOSL as the enduring Market Operator (MO) is set to be completed by March.

Ofwat is consulting until 9 September on a proposed transition scheme to switch off existing competitive business retail arrangements and switch on the new framework. The Open Water partners said waiting until April to press the button on most elements would “provide greater certainty for market participants, and reduces the risk of unintended consequences from switching on some elements ahead of market opening”.

The MO will be appointed through a collective decision, scheduled for January 2017, by appointed companies and WSSL holders. They will have to approve MOSL’s draft amended Articles, business plan and budget, which are currently being produced. MOSL will seek members views in early September by issuing a business plan “principles and assumptions” paper, comments from which will be included in its subsequent business plan. Consultation with members will continue through the autumn.

Following the January decision, the MO appointment will be formalised through the legal and regulatory market framework when appointed companies, WSSL retailers and MOSL as the MO all sign the framework agreement for the Market Arrangements Code (MAC). This is scheduled for March, with MOSL adopting MO duties from April.

Among other elements of the transition plan are:

  • Codes Panel: The Interim Codes Panel (ICP) will be abolished at market opening. Ahead of that, the enduring Codes Panel will be set up to undertake preparatory work ahead of adopting its responsibilities (primarily recommending whether Ofwat should accept or reject proposed changes to the Wholesale Retail Code (WRC) and MAC). The Panel will be chaired by the MO chair, with members as follows: three from associated retailers (linked to incumbents); three from WSSL holders not affiliated to an appointed company; three wholesale members; and three independents appointed by the chair.

  • Codes: The transition plan sets out when and how the two key codes (WRC and MAC) and other codes (customer protection code, interim supply code and retail exit code) will take effect.

  • Licences: The current WSLs will be revoked at market opening, when the new WSSLs come into effect. Ofwat intends to use a statutory transition scheme to revoke the existing WSLs.

  • Switch freeze: Ofwat proposes to restrict customer switching via the current Customer Transfer Protocol (CTP) for 20 days immediately prior to market opening to prevent any transactions being caught mid regimes.

Subject to responses in by 9 September, there will be a further statutory consultation on the transition scheme at the end of September.