The market operator performs an exchange function, and is therefore “removed from customers”, according to consulting firm PwC.
In a report commissioned by the Consumer Council for Water, PwC laid out the first seven success criteria of Market Operator Services Limited (MOSL), which it said were all relevant to the household market as well as non-household.
The seventh criterion, it said, is the “only truly customer-focused one”.
The report considered lessons the water sector could take from other regulated sectors, such as energy and telecoms, which have already opened their household markets to competition.
It also looked at how existing success criteria for water market reform could apply to household competition.
What does success look like to MOSL?
Source: MOSL
PwC warned that consumer detriments may be caused by market failure, regulatory failure and/or behavioural bias, and urged regulators to use specific tools, such as licence conditions and standards of conduct, to target detriments or issues arising in markets.
Six key success factors for a household retail market in water, set out by PwC, are:
- Price competition among retailers with a level playing field
- Customers receive value for money for the price and services offered by retailers
- Customers are active and engaged in the market, and switching supplier is easy
- Retailers are motivated to deliver improved services
- New suppliers can enter the market freely
- Customers who need extra protection receive it
Ofwat is due to publish the final findings of its cost-benefit review of the household water retail market next month.
Tools regulators can use to target consumer detriments
Source: PwC