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Water companies must decide quickly whether to stay vertically integrated, or split into retail and wholesale arms in a bid to guarantee a level playing field for new entrants when the market opens to competition for non-domestic customers in 2017. The options are laid out in the latest version of the market blueprint, published today by Open Water.
The blueprint, known as the Market Architecture Plan (MAP2), outlines the key market codes for when the non-domestic sector opens up to retail competition in April 2017.
WICS chief executive Alan Sutherland, who Utility Week revealed to be taking over the delivery of the Open Water programme, said: “Water companies have historically much preferred vertical integration, and water companies have always had a strong culture of compliance.
“These two things come a little bit into conflict – the more that one stays vertically integrated, the more risks one could be seen to be running with regard to the level playing field.”
The final framework, which updates the MAP1 document which was published in July 2014, outlines the rules and procedures that will govern competition in England, based on the Scottish model.
These include the terms of trade between wholesalers and licenced retailers; the operational procedures; and the market processes and procedures.
Alongside retail separation, the other key strategic issues include how the companies will allocate gross retail margins by class of customer, and what they need to do to cleanse their data so that it is “fit for purpose in the new market arrangements”.
On the publication of MAP2, water minister Dan Rogerson said it represented “important progress” and was a “significant milestone”.
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