Retail market governance poised for revamp

From 1 September, the Panel that oversees the non household retail water market will be restructured and a new set of principles introduced to improve governance and deliver better outcomes for customers.

Ofwat has approved the change proposal (CPM039/CPW124) it put forward on Panel composition. This will see the current Panel split into two: a Strategic Panel and a Code Change Committee, each with nine voting members with the balance 5:4 in favour of non-industry members. There was a slight change from the proposal in that the four industry members will comprise two wholesalers and two retailers, rather than any combination of four trading party representatives.

Ofwat rejected both the alternative solution proposed under CPM039/CPW124 (which was the same as the proposed solution except as regards the composition of the Panel Nominations Committee) and the Panel composition structure proposed by Castle Water under CPM021/CPW125 which gave the balance of power to industry members.

Ofwat also approved with modifications CPM040/CPW121, which sought a new set of principles to underpin the market. From 1 September, the principles set out in the Market Arrangements Code and Wholesale Retail Code will be replaced by the primary principle of advancing customer interests, supplemented by eight supporting principles.

The regulator modified the original drafting to ensure the intent behind the primary principle is effectively achieved. It explained: “This includes to emphasise that the focus of change proposals should be on promoting the primary principle and that the supporting principles cannot – individually or collectively – override the primary principle.” It also specified that the revised Change Proposal Form should be updated to make it clear that all change proposals must provide information and evidence to demonstrate how they directly or indirectly support the primary principle.