21 January 2016: Update call
Update call for stakeholders
This document summarises the key issues discussed during the 23rd Open Water update call.
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These are regular calls that are open to stakeholders in the Open Water Programme . The call
was held on 21 January 2016 and was chaired by Adam Cooper, Ofwat. Also on the call was Ben
Jeffs, MOSL.
Update from Ofwat (Adam Cooper)
Thank you for dialling in today. We will follow the usual format where I will kick off, followed by Ben
then we will deal with our questions on notice before opening the call up.
At a programme level:
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RMOMG meets this afternoon. Outside of the standing items we will be discussing some
issues around engagement; success criteria and the upcoming CEO workshop.
On the assurance letters we put out a programme note to provide some more clarity on the
processes and approach.
From an Ofwat/Defra perspective:
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Eligibility workshop – scheduled for the 29th, the agenda is still being worked up, but we
have heard a plea for pragmatic approaches wherever possible to provide additional clarity
Wider programme perspective: MOSL have only just missed their first significant deadline
and will play catch up with that. No one is missing critical milestones, the programme
remains on track. [update: the data strategy was issued on Wednesday 20 January]
Credit/payments – we achieved a strong consensus between wholesalers and retailers on
an approach to credit that would provide a fair allocation of risk and help to reduce the
significant working capital requirements that would have arisen under the less sophisticated
approach.
o Ofwat is concluding a contract with a party to further finesse the broadly agreed
approach to make sure that the credit options are contemporary, and maintain the
balance of risks. The work will begin shortly, and we are planning on a workshop
before the end of February.
Code of Practice (CoP) condoc closed on the 11th – we received over 30 responses – so
thank you for your continued engagement. A workshop was held yesterday to provide
further opportunities to discuss the possible approaches – and initial feedback was very
positive. Customer protection remains a key area of work with the CoP sitting alongside the
At the current stage of the programme, these calls are intended for current suppliers, potential entrants and
relevant public bodies (for example, statutory representatives or regulators). We will make the notes from the
calls accessible to all on our website and will consider requests from other interested parties to join the call,
but please note these may not always be accommodated depending on the number of participants and the
subject of discussion.
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21 January 2016: Update call
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statutory work on the ISC and deemed contract (exit) codes; and the Guaranteed Service
Standards (GSS) regulations.
o The GSS regulations are expected to be published early in 2017 as noted on the
integrated plan. We have had a delay in our advice to Defra and the Welsh
Government to March as we have had to prioritise our legal efforts on critical
milestone issues. We do not think that a delay in our advice will impact on the
planned delivery. It is also worth noting that the GSS changes were primarily about
getting the correct coverage, rather than opening up a new debate on the specific
standards. We will issue an information note shortly to provide further details on our
approach to finalising this work.
o The ISC and exit code approach is going to our Board next week and will be
followed by consultation on the draft text.
Licence application process is progressing and we are looking to publish a suite of
documents in the next couple of weeks. These will be supported by a workshop
provisionally planned by 8 February
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Code of Practice condoc closes on the 11th – and there is workshop planned for
later the 20th of this month.
The team is now drafting the code text for the interim supply code and the exit
(deemed contracts) following the responses to the consultations. We will consult on
these in due course in order to have these two statutory codes in place ahead of
applications opening for the WSSL
From an Ofwat/Defra perspective:
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I also wanted to give a heads up on a couple of small changes that we want to make to the
integrated plan on Ofwat deliverables. The changes do not impact on any critical
milestones, but our new esteemed Programme Director has refreshed our timetable (in
discussion with MOSL and Defra) so that we plan:
o To move the start of the consultation on the retail exits code and interim supply
code to early February (from the end of January); [1 week]
o Moving the customer protection consultation from mid February to mid March. With
the final customer protection codes delivered in the 3rd week of May [1 month]; and
o Moving the consultation on the licence application process back to late January
(from mid Jan) with finalisation moving from early March to mid March [2 weeks].
Update from MOSL (Ben Jeffs)
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Data strategy document went out last night. Apologies again for the delay; there is always a
balance to be struck between issuing information early and ensuring that it is as complete as
possible for partipants.
We are looking for comments to inform the all-day Data Special Interest Group (SIG) on 1st
Feb. We would ask you to hold off on sending in questions, but would be interested in receiving
thoughts for designing the event (via Portfolio Managers)
21 January 2016: Update call
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Will be issuing budget documents in next couple of weeks, including Q1 update, detailed
2016/17 budget and view on MOSL’s ‘enduring’ costs for 2017/18.
All Party Parliamentary Water Group event. Discussion on preparing culturally for competition,
and that companies need to adopt different behaviours.
o Chaired by Ann McIntosh. Also on panel: Kevin McRae – Gemserv and Alan
Sutherland – WICS
o Panel was interested in how companies were preparing their employees (employee
engagement) around the change recognised as an area that needs more work on.
Presented at Utility Week Conference – question raised around market opening.
We are currently creating ‘heat map’ templates that will ultimately be used to report progress
across all participants.
January Market and Company Readiness self-assessments due in to Portfolio Managers by
Friday 22nd. We are preparing a note back to you to say what action we took following your
feedback.
Started developing MOSL own self-assessment. We are applying the same level of test that we
are applying to you.
Participants’ web forum will be going live at the end of next week
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We were going to use Podio for the Forum, but felt that it was better implemented via the web
site – one log-on will give you access to the forum too. Podio will still be used ‘behind the
scenes’ to manage questions
We’re looking for primary contacts in each company to work with us to develop the forum.
Please could you send in your nominations to comms@mosl.co.uk (Note: not communications
as mentioned on the call)
Engaging with water companies’ comms teams
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MOSL presented to comms teams at Water UK meeting on Friday 11 January – aiming to
arrange a WRG-style meeting in February (diaries allowing). There was an awareness across
the industry that there is a need to join up communications within participant companies.
Please review the way in which you are involving your internal comms/communications teams
in the process
Ben attended Utility Week Customer Conference this week and will be attending the Major
Energy Users’ Association (MEUC) next week.
Upcoming meetings
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25th Jan – Test SiG
27th Jan – WRG
1st Feb – ‘Deep dive’ Data SiG
Questions on notice
Question: Can an update be provided on the output from the GSS consultation? When can the final
draft of GSS regulations be expected?
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21 January 2016: Update call
Answer (Adam Cooper): We have moved the advice to Defra and the Welsh Government back to
March. This does not impact on the timelines for the finalisation of the regulations in 2017. Worth
remembering that the GSS work was about coverage rather than re-opening the standards.
Question: We understand a meeting regarding SIC codes is scheduled with HMRC – is there any
further information available on this?
Answer (Ben Jeffs): I think the outcome was to take codes out of the MOSL system to avoid the
HMRC identified risks of a misunderstanding arising from the mismatch between EU and UK codes
Question: Has any consideration been given to hosting a specific industry session/SIG (special
interest group) meeting with a focus on Shadow Operation?
Answer (Ben Jeffs): The next phase through this year is about everyone working together in order
to implement the central market systems for the market to go live on 1st April 2017. With the
publishing of the data strategy, MOSL has now published all of our strategic thinking to frame the
implementation of the programme. Any issues that need further clarification, such as those relating
to the shadow market, should now be directed through the existing framework of meetings and
events, eg the workplan review group, and via Portfolio Managers.
Question: Credit and payment terms
The proposals set out within market architecture plan (MAP)2 minimised the exposure of
wholesalers to credit risk. We believe that the credit provisions set out within MAP5 do not
adequately limit the credit risk wholesalers will be exposed to. Given their importance we believe
that the credit and payment terms need to be clarified urgently.
Is the principle that wholesalers will not be exposed to significant credit risk to be maintained? If
not is there the potential that wholesalers will be faced with an unsatisfactory credit risk?
By when should we expect an outcome of the review into credit and payment terms, and how is the
appropriateness of the wholesale credit risk being considered?
Answer (Adam Cooper): As noted earlier the credit risk workshop reached a broad consensus on
an acceptable way forward. The additional work on credit is not designed to re-open this
consensus, but rather to improve the quality of the agreed approach. We have to be careful to
maintain a position where respective parties manage their own credit risk – where managing the
risk is not foreclosing the market but rather is agreeing acceptable terms and conditions to reflect
good risk management processes and the quality of the retailer.
Question: GSS rules and guidance
When do Ofwat intend to publish rules relating to the application of GSS regulations in the retail
market? The absence of this guidance has the potential to delay preparations for market opening.
Answer (Adam Cooper): As noted earlier.
Question: Level playing field guidance
Ofwat have previously suggested that they may provide additional guidance and rules relating to
the level playing field. Can you confirm if it is still the intention of Ofwat to publish further guidance
on the level playing field and if so when will this be published?
Answer (Adam Cooper): Our casework team is reviewing the compliance code guidance and will
decide whether this needs to be updated. Work is ongoing, but can’t commit to a specific time –
except to note that any work here would have to be complete ahead of the IATB changes.
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21 January 2016: Update call
If you have a question you would like to ask, please send details to:
amanda.rooney@ofwat.gsi.gov.uk.
Other Questions
No further questions
Chair's summary
Adam Cooper thanked everybody for their participation and invited feedback on any aspect of the
Update Call.
Join the next call
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