Codes

The Water Act 2014 enables the creation of a new market that will allow 1.2 million businesses and other non-household locations to choose their supplier of water and wastewater ‘retail services’ from April 2017. Retail services include things like billing and customer services.

The UK Government established the Open Water  programme that brings together all of the key organisations to design and deliver the new market- Ofwat, Defra and the new market operator, Market Operator Services Limited (MOSL). The integrated market opening plan sets out the timetable for opening the new market. The market architecture plan sets out the high level design and underlying principles for the new market.

Opening the new market is a complex challenge but we are on track to open in April 2017. The design is almost complete and work is now being carried out to deliver the technical systems, checks and ways of working that are needed to get the market right for customers.

An important part opening the new market is producing the documents (‘market codes’) that set out how the market will work – and how the market participants will work with each other. These market codes are the Market Arrangements Code and the Wholesale-Retail Code. As the market codes are developed – and until the market opens – there is a need for a body to process and coordinate any changes.  We call this the ‘Interim Code Panel’.


What is the Interim Code Panel?

The Interim Code Panel are a group of elected representatives who consider and make recommendations to Ofwat on any changes that are needed to the draft market codes. The market codes deal with the following.

  • The Wholesale-Retail Code (WRC), a statutory code which sets out the business terms, market terms and operational terms that will apply to all two-way arrangements between a wholesaler and a licensed retailer
  • The Market Arrangements Code (MAC), a non-statutory code which sets out the arrangements to establish a market operator, including the processes for joining and operating the market operator and for establishing a code panel.
  • Other codes that may be needed to allow the market to function correctly.

The Interim Code Panel considers and recommends:

  • any changes to the WRC and MAC which will ensure the market functions correctly at market opening
  • also whether any proposed changes could be made after the market opens.

The Interim Code Panel will also be able to provide recommendations to us following our consultation on the full suite of market documents – which will happen before the opening the new market.

The panel will be able to make recommendations on the MAC in the period between the publication of the latest market architecture plan (MAP) in mid-July 2015, and the establishment of the enduring panel at market opening.

The panel will work closely with stakeholders on the interactions between its work and the  IT system vendor  building and testing the central systems that are needed to handle the registration of customers, switching between suppliers and financial settlement calculations in the market.

MOSL systems construction has started and we expect that some narrow, technical adjustments may be needed to the WRC and MAC  in August and September 2015 to permit the efficient construction of MOSL’s systems.


Why is the Interim Code Panel needed?

The Interim Code Panel will:

  • provide a formal change control process for industry codes and ensure that changes are managed effectively;
  • improve acceptance and buy-in to the final market documents by market participants, by giving them a clear elected voice in finalising those documents; and
  • give the water sector experience of how the panel will operate in practice, allowing for an easier transition to the Enduring Code Panel at market opening.

Who is on the Interim Code Panel?

The interim panel has the following members.

  • Tim Davis – Independent Chair (appointed by Ofwat)
  • Mark Holloway (Thames Water) – Independent member (elected by wholesale companies)
  • Howard Smith (Yorkshire Water) – Independent member (elected by wholesale companies)
  • Michael Brindle (United Utilities) – Independent member (elected by associate retailers)
  • John Vinson (Water 2 Business) – Independent member (elected by associate retailers)
  • Trevor Nelson (Business Stream) – Independent member (elected by new entrant retailers)
  • Nicola Smith (Clear Business) – Independent member (elected by new entrant retailers)
  • Two independent members, Elsa Wye and Nigel Sisman (appointed by the Chair)

Please note that all members speak as experts and do not represent the views of their employers nor the constituency which voted for them.  Such details are only provided for reference

In addition to the panel members, there will be a Panel Secretary from Market Operator Services Limited  (with a non-voting role). There will also be several invited observers which include a consumer representative (The Consumer Council for Water), Ofwat, the Water Industry Commission for Scotland (WICS) and MOSL.

‘Wholesale companies’ are companies holding an appointment under the Water Industry Act 1991, new appointments and variations, and associated companies of any such entity (which do not themselves hold a water or sewerage supply licence under the Water Industry Act 1991).

‘Associate retailers’ are any company holding water or sewerage supply licences under the Water Industry Act 1991 which are associates of companies holding an appointment under the Water Industry Act 1991.

‘New entrant retailers’ are companies holding water or sewerage supply licences under the Water Industry Act 1991 and/or companies holding licences granted under the Water Services etc. (Scotland) Act 2005 provided that no associated company of any such company is a wholesale company.


How does the Interim Code Panel work?

The Interim Code Panel will agree its working practices and details, and meeting minutes, will be published.  We will procure any external resources that are required, and these will be funded by the Open Water licence fee that we charge licensed companies.

The panel will follow the processes set out in sections 6 and 7 of the market arrangements code (processes set out for the Enduring Code Panel) unless the panel considers that these processes need to be simplified to allow more streamlined decision making. Parties that will be able to propose changes to the market codes  include:

  • market participants – either through their elected representatives on the panel or directly
  • Ofwat and WICS
  • MOSL – these changes are likely to be primarily focused on the feedback from the systems vendor and any outstanding changes from the legal consultation process on the third version of the market architecture plan (MAP3).

Anyone wanting to propose a change proposal to the market codes must be sent to the secretary of the Interim Code Panel, who will distribute it to all panel members and observers.  These will be published by MOSL website The panel will discuss the proposal at its next meeting, providing the Panel Secretary receives it more than ten business days before that meeting. Otherwise, the proposal will be discussed at the following meeting.

All market participants are invited to assess the implications of modifications to the codes and send comments to the code administrator and panelists.

The panel will evaluate each proposal for modification to market codes. In doing this, it should:

  • take reasonable steps to engage with any party that has an appropriate interest in the modification proposal;
  • consider views from interested parties; and
  • recommend amendments to the modification proposal, as appropriate.

The interim panel is able to:

  • seek expert evidence;
  • establish sub groups to consider a proposal; and
  • procure an impact assessment for a modification proposal.

In deciding whether to use any of these measures, the panel need strike a balance between robustness of decision making and efficiency. This may be especially relevant for potential changes arising from the construction of MOSL’s systems.

The interim panel will vote on each proposal and then make a recommendation to Ofwat on whether and when to approve each potential modification.

After voting on the modification proposal, the Panel Secretary will produce a written report and circulate this to all panel members, which should include how the panel voted and the views expressed.

How to propose a change in codes

Anyone wanting to propose a change proposal to the market codes must send it to the Panel Secretary, who will distribute it to all panel members and observers.

Please email: interimcodepanel@ofwat.gsi.gov.uk

Latest code changes

On the Open Water website you can find:

  • a list of proposals to change codes
  • the panel’s recommendations; and
  • Ofwat’s decisions.

You can also find links to the latest versions of the codes and details from meetings of the interim code panel.