SCOTTISH WATER Business Stream was established as a separate retail company in October 2006, and awarded provisional licences at that stage. The Commission required that in order to achieve full licences in advance of market opening, Business Stream had to demonstrate a high degree of separation from Scottish Water. Business Stream’s full licences were awarded in January 2008, just before market opening, following a review by the Commission of the extent of separation between Scottish Water and Business Stream. Retail separation is governed by the Intra-Group Regulation Directions and the Governance Code, both made by the Commission. The activities to prepare for the market opening can be divided into five broad strands: n Wholesale team – establishing a team to fulfil roles such as account management, product management and billing n Separation and new processes – commenting on the market new processes as they were developed and implementing the supporting process arrangements in Scottish Water, including the Wholesale Service Desk n Systems changes and data migration – a comprehensive IT change programme to handle the flow of data to and from the various parts of the market n Compliance, training, culture and behaviours – essential to the success of the market opening was giving people the skills they needed to do the job, winning over “hearts and minds” and to ensuring all Licensed Providers were treated equally n Completion of legal and other arrangements in Scottish Water to support separation New compliance arrangements were established, with the appointment of a Compliance Officer. The Compliance Officer prepares annual Compliance Statements setting out how Scottish Water will fulfil its obligations, and annual reports on performance over the year. These are underpinned by Assurance Statements from key business areas confirming that they are able to carry out their obligations. The Compliance Officer also investigates potential compliance breaches. The separation between Scottish Water and Business Stream required careful planning and employee consultation, including the pension arrangements for the staff transferring. The basis of the transfer of staff, assets, customer contracts and liabilities was a document called the Transfer Agreement. All of this had to take place without any adverse effect on customer service. Senior management commitment from directors and general managers was also a key part of getting Scottish Water to successfully make the move – without their commitment of time and resource – and the dedication of the staff working on the various strands of work – the shift from integrated supplier to wholesaler would not have been possible.
Jessie McLeman, Head of Wholesale Revenue Management, Scottish Water
What would Scottish Water have done differently to prepare for the market opening? While work was undertaken on data management prior to market opening, more focus and thought on this area at an earlier stage would have been helpful. Changing the data so that it met wholesale requirements was very challenging. For example, the data had to be structured to meet the requirements of wholesale settlement, and the new Wholesale Scheme of Charges which was agreed in readiness for market opening; and the links between the new market processes and associated data had to thought through. The difficulties associated with this was underestimated. With hindsight, there are always improvements which cane be made in implementing new processes, and that is undoubtedly the case here as with other markets openings. The timescales in which to establish market arrangements, create systems and processes, undertake data migration and train people were very challenging. Lessons learnt since market opening will continue to be applied. There will always be challenges in establishing new market arrangements; and a proactive and constructive approach to resolving any issues early with full co-operation of all stakeholders is very important.
17th iteration and there have also been changes to the Market Code and other documentation. It is essential to establish governance arrangements such that the market can continue to meet customer needs. Scottish Water is a member of the Technical Panel, as are the Licensed Providers. This involves attending meetings which take place every two months. Scottish Water and other market participants may make Change Proposals to the Technical Panel. The CMA provides administrative support for the Technical Panel, and a process for dealing with Change Proposals which are agreed. Changes to the Market Code may involve modifications to central systems and those have to be planned and assessed carefully. The CMA has a release plan setting out its planned system changes which typically occur twice yearly. Some changes affect market participants’ own processes and systems and require careful planning and coordination. In Scottish Water, the Wholesale team is responsible for relations with the CMA. Jessie McLeman, Head of Wholesale Revenue Management, Scottish Water, said: “The customers of the water market in Scotland now have choice. Competition means businesses and other organisations can benefit from the tension competitive choice will bring. Scottish Water is fully committed to its role of wholesaler and to engaging with the various stakeholders in the market to improve the operation of the retail market in Scotland.”
Five years on – refining processes and providing benefits The wholesale market in Scotland is continuing to evolve and to change with it Scottish Water also has to evolve. The Operational Code is now on its
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