“People expect things to improve in the market quickly and we’ll play our part in that.”

 

Chris Scoggins is a problem-solver. That’s just as well, because his latest role involves transforming the water retail market operator from a dynamic but makeshift start-up into a slick “enduring organisation”.

The chief executive of Market Operator Services Limited (MOSL) meets Utility Week at the Institute of Directors on Pall Mall to discuss the first year of the open water market, and MOSL’s role in such a complex operation.

What exactly does he see as MOSL’s enduring role? “To provide the infrastructure for the market to operate, to provide the information services to enable the market to operate, and to provide the governance services – primarily focused around the panel and the code management, market performance monitoring and reporting, providing information externally and transparently to drive improvement through reputational pressure by reporting what we know about the market transparently,” he says, and then laughs. “Sorry, that wasn’t very concise.”

Scoggins – a graduate in archaeology and anthropology from the University of Cambridge – speaks deliberately and precisely, using archaic terms such as “primordinate” when describing MOSL’s main goal before the market opened. Now, 12 months in, the vision for the second year is to make sure all market participants are collaborating for the betterment of the sector, which should, among other things, help to reverse a steep rise in customer complaints.

Scoggins’ love of complex challenges is evident from his career choices. He started out in advanced IT and artificial intelligence, and worked in financial services as a management consultant and as a qualified fund manager, before taking up his previous role in the transport sector. “I’ve always liked going into new sectors. I’m adept at picking up new things, new industries. I like challenging areas of complexity,” he tells Utility Week.
“In transport, I particularly enjoyed the organisation that was owned by the members of that market in rail [National Rail Enquiries]. I enjoyed the satisfaction of navigating the challenges of bringing in change across a market with so many different trading parties and different points of view, along with, of course, the government, the regulator and the other stakeholders.”

He led National Rail Enquiries from the beginning of its digital life, transforming it from a pure contact centre to 99 per cent online with 17 million customers. He also built its business-to-business division from scratch, which now provides 1,200 services to third-party clients.

So, on to his next challenge – transforming MOSL into a permanent company, a role he took up in June 2017. “When I was approached about this role, it seemed like a very good fit and a great opportunity to do that in a brand new market.”

The story of MOSL’s evolution is fascinating. Few companies are formed with the sole purpose of introducing competition into a monopoly market. To do this, the market operator has been forced to adapt in a unique way. “We have to move very quickly. People expect things to improve in the market quickly and we’ll play our part in that. But we need to do that at the same time as bedding down our organisation, and bedding down the processes and systems across the market,” he explains.

MOSL was formed out of necessity in February 2015, after the previous organisation tasked with procuring the central IT system – Open Water Markets Limited – was deemed to be a public body and therefore restricted in its ability to move as swiftly as the programme required.

MOSL’s sole purpose was to open the market, which meant that everyone’s focus was on activities that would facilitate this. The strategy was successful and, despite a few hiccups, the market opened on time and on budget.

However, having to get MOSL up and running in a limited amount of time and focused on one goal, meant the first iteration of the company was resourced mostly by short-term contractors, with limited processes in place for HR, learning and development policies, performance management and finance systems.

“The first thing to do was hire a team of permanent employees,” says Scoggins. This started in June 2017, when he himself was brought in as enduring chief executive. “Then putting all those systems and processes in place, and the values and the culture – there’s still a lot to do on that front.”

One of MOSL’s responsibilities is to keep costs down in the market, and its decision to move out of the most expensive city in the country has a big part to play in this. It is on track to leave London by January 2019.

In its latest quarterly report – published on 13 August – MOSL said it has identified two potential office locations in Southampton, which was chosen, Scoggins says, for its rail, road and air connections to the rest of the country. “It has two excellent universities, plus two others in nearby cities, so it has a great pool of talent. And, of course, it’s far enough away from London to be able to get better value for money for members.

“A key factor in the location decision was that we need to retain as much of the knowledge as we can: our team is a central London-dwelling team, and we needed to find somewhere where we would have the best chance of retaining the most people.”

It is no secret that the retail market, since it opened, has not been perfect. If you ask a retailer which market issue needs resolving most urgently, most will pick customer engagement and awareness. While Scoggins does see engagement as an issue, his answer to the most pressing issue is different. “The one or two I would pick out would be unpaired SPIDs [supply point identifiers] and transfer reads, to enable smoother, more efficient switching for customers.

“I would hope that we would see the number of long-unread meters reduce and, for those meters, I would like to see the completeness and accuracy of associated YVE [yearly volume estimate] values and meter master data resolved to enable effective, efficient and accurate settlement.”
Overall, Scoggins believes the open market is going okay, but he is aware that improvements need to be made. “In terms of the day-to-day operation of the market, it’s going pretty well. We’re in a good place,” he says. “With every release of CMOS [Central Market Operating System], we’re resolving the majority of the higher-priority issues that come up as people try new ways of doing things. We’ve long ago resolved the very large issues that came up in the initial market opening phase.”

How is the market going in terms of the performance of trading parties? According to Scoggins, there has been a big improvement. Referencing MOSL’s first quarter report for 2018/19, he says retailers have hugely stepped up their performance. Wholesalers, too, have improved. “There’s still a long way to go, but I’m always keen not to tar everybody with the same brush – there are some very good performers and some not-so-good performers in every category.”

In terms of customer engagement, Scoggins says how successful it is perceived as depends on what expectations of it were before the market opened. “Some see it as an expected first-year level of engagement, others see it as slower than they would’ve liked,” he says, “and of course over the next few years we need to see engagement going up significantly.”

Awareness levels also need to improve. “I wouldn’t have expected it to be particularly large in the first year,” says Scoggins. “But it’s clearly an attractive market to retailers – we have more joining every month and a relatively consistent, over time, level of switching continuing to happen, and there’s no sign of that tailing off.

“The key for me is: is the market operating smoothly and is the performance there from trading parties in serving their customers and transacting with each other, and in resolving the many market issues?

“There are a number of issues and we’ve prioritised them according to the impact they have on end customers, and on the ability of parties to transact.” He would like to see the problems surrounding switching and settlement largely put to bed by the year end.

“I would see the market over the next few years as going from strength to strength,” he says. “There’s a lot for business customers to gain from engaging with the market. We’re starting to see retailers competing, with a good range of offers. Having a range of offers to present to customers and potential customers and having a low overall cost of transacting, is key to an efficient and effective market.”

However, MOSL can only do so much to help in this area, says Scoggins. One thing that is currently raising costs for retailers is poor communication with whole­salers. “Each retailer, if they’ve got a national portfolio of customers, or even one customer with a national spread of premises, has to deal with up to 20-odd whole­salers, each of which has different ways of handling meter replacements, and so on.

“We’re working with trading parties to identify the best resolution to this, because it’s a significant cost driver in the market.”

Over the next three to five years, Scoggins would like to see a better solution for bilaterals in place. This, he explains, will reduce costs for everybody, and make things faster and more efficient. He also wants to see the industry get on top of big data issues. “Every time someone has to intervene in a switch because it hasn’t gone right because of a data problem – this is eating margin and costs,” he says.

Like all market players, Scoggins doesn’t know what the government’s plans are for domestic competition, and he doesn’t have a personal view about whether it would be the right thing for the country. However, he says, if it does happen, MOSL is ready.

“We’re well placed to look at how that could be done and to apply the lessons from opening this market to that,” he says. “A key thing were that to happen would be to make sure it was set up in an efficient way: one code body, one central set of systems and processes. It must be designed flexibly, rather than, as we’ve seen in other industries that have been opened to competition, designed with many different moving parts to the governance structure. This builds in a slow list to change, impedes change and builds in inefficiency.”

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