Leader: Shadow water market will test new retailers

Battle lines are drawn and manoeuvres have begun.

No, I’m not referring to Labour’s internal machinations or any podium posturing at party conferences – although we cover those too in our Lobby feature (see p10 in this issue). For water utilities, the most important exhibitions of power and competence in coming weeks will be those displayed on the field of shadow market operation, which officially opens to combatants on 3 October.

This strange limbo environment before bona fide competition in April 2017 is a critical one. Although extensive testing has been carried out on all market systems, shadow market operation will put these to test in a like-live environment for the first time.

Likewise, while many of the new water retail companies have spent months preparing strategies, wooing business prospects and fine-tuning their value propositions, we have only really seen glimpses of these new utilities. Shadow market operation will lure them out into the open. And although it’s likely that the most ambitious operators may keep some tactics in reserve for full market opening next year, the shadow market will allow opponents to view one another in action for the first time.

Those close to preparations for non-domestic competition do not expect shadow market manoeuvres to be painless. In a recent review of MOSL’s state of readiness, Ofwat expressed strong concerns about issues still to be addressed in the market’s central operating system. The regulator and the market operator also observed that many ­companies have a lot more to do before they are ready to start ­serving real customers.

In the shadows, it may become clear which hopeful business suppliers have invested well and which have not – those that show weakness, through failing IT systems, data handling niggles or process crashes, may find themselves at a disadvantage in the eyes of many of the most valuable customers when the market opens for real.

• The business realities of delivering market change will be front and centre of discussion at this year’s Utility Week Congress (18-19 October in Birmingham). The impact of new regulatory requirements, disruptive technologies and customer trends, on both energy and water utilities, will be explored. An afternoon workshop will be dedicated to examining early signals from the shadow water market. www.uw-congress.net

Jane Gray,
Acting Editor
janegray@fav-house.com