Enabling world’s first competitive water market.
Client: Water Industry Commission for Scotland
Title: Design, build, test and implementation of central market systems
Our Service: Market Design
“Gemserv was central to the work that the Commission had to complete to set up the world’s first competitive market in water services. This involved delivering a programme to a very tight timescale, managing multiple stakeholders all within a tight budget.”
Alan Sutherland, CEO, Water Industry Commission for Scotland
Gemserv was appointed by the Water Industry Commission for Scotland (WICS) to assist with the design and operation of the world’s first truly competitive retail water market.
In addition to developing the market design solution in collaboration with WICS and key stakeholders, Gemserv designed, built, tested, implemented and operates the central registration and settlement system required to underpin the new market arrangements.
Gemserv project managed and delivered the processes and IT systems required for the opening up of the centralised market.
A project team was established at the WICS offices in Stirling and at our software developer in Glasgow which encouraged better communication and flexibility and in turn ensured that design input was effectively captured.
The assignment included authoring subsidiary documents that set out the procedures to be followed by market participants, and contributed to the development of the Market Code and Operational Code.
Specific deliverables included:
- Developing Supply Point (customer) Registration system requirements that facilitate switching
- Developing wholesale settlement system requirements used to calculate aggregate, and allocate charges to the appropriate retail supplier
- Providing further guidance on mechanisms for facilitating the market, including the Market Design section of the Market Code
- Designing the data communication protocols for participants and defining transaction structures and format
- Defining and specifying the Central Market Agency (CMA) role and functions
- Setting up transparent market procedures and the appropriate change control to maintain them
- Developing market monitoring and performance measures, including procedures for controlled market entry and exit
- Providing input into the tariff setting methodology
- Delivery of a “provider of last resort” process, to enable the continuation of supply in the event of a licensed water and sewerage services provider going into administration
When the Scottish non-domestic water market opened to retail competition in 2008 there was a choice of licensed providers of water and sewerage services which had entered the market following successful completion of the market assurance requirements operated by Gemserv.
Although to date relatively few customers have switched supplier, around a third of non-household customers are on a better deal than before the competitive market opened. WICS sees evidence to suggest that the threat of competition is delivering benefits to customers, for example through increased innovation and a better focus on customers in the services offered by both wholesaler and licensed providers