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Costs and Benefits of introducing competition to residential customers in England

The consideration of the costs and benefits of the introduction of retail competition to residential customers is an important component in the Government’s broader vision for opening up markets to new markets, promoting more competition, driving efficiency and innovation. Gemserv recognises the challenges posed to Ofwat in undertaking its analysis given the wide range of uncertainties and the consequent need to undertake scenario analysis against different sets of assumptions and welcomes the opportunity to respond to this consultation on the costs and benefits of residential market competition.

Costs and Benefits of introducing competition to residential customers in EnglandThe consideration of the costs and benefits of the introduction of retail competition to residential customers is an important component in the Government’s broader vision for opening up markets to new markets, promoting more competition, driving efficiency and innovation.

Gemserv recognises the challenges posed to Ofwat in undertaking its analysis given the wide range of uncertainties and the consequent need to undertake scenario analysis against different sets of assumptions and welcomes the opportunity to respond to this consultation on the costs and benefits of residential market competition.

We believe Ofwat will benefit from our experience and expertise in these areas as we have evolved from a company created by market participants in 1998 to design and support the code arrangements for the retail electricity markets in Great Britain. As such we act as a contracted agent to the Master Registration Agreement Service Company (Mrasco Ltd) to facilitate the operation of retail electricity markets. We therefore have in-depth experience in the development and operation of residential market competition and are keen to bring this experience into the water market.

We have worked in the recent past with Ofwat on supporting policy development, applying our experience from other markets. In addition to our experience at market level, many of our staff and associates have worked at company level as strategic and operational practitioners in the utilities markets, including water. Over the past 5 years we have prepared a variety of Thought Leadership papers which have input on a series of topics including learning points from other markets “Getting it right first time”, market governance, level playing field, new entrant perspectives and business customers considerations.

We are currently actively participating with some water companies in England to help prepare their readiness for the introduction of non- household competition in April 2017 and our experience has included working on the on the development of PR14 and associated business plans for one of the companies granted “enhanced status” by Ofwat in its price determinations process. We have also been working on market readiness plans for a number of other water companies.

In addition to the water company work we have provided some support to both Ofwat in its preparations for the new NHH market and to Open Water in its MAP documents, where we contributed an appendix on market readiness.

Our interest and understanding of the industry means that we keen to further support Ofwat in its wider Project 2020 work which will drive further market reform for the benefit of customers wherever appropriate, and our response to this consultation on residential market competition is part of this, seeking to fulfil our company’s mission of “ensuring that complex markets work for everyone’s benefit”.

You can find out more by reading the full response here.

Or, for more information and how we can help you, please contact us by email or phone +44 (0) 207 090 1022.

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