Market Governance Review

Background

In 2020, the Panel established a Governance Steering Group to manage the delivery of the Market Governance Review.  The Steering Group commissioned independent consultant Satori Board Review to review Panel effectiveness. Satori’s work covered Panel stakeholders, purpose, strategy, structure, operations, meetings, decision making, and development. As part of the review, Satori surveyed wholesalers and retailers and conducted detailed interviews with Panel members and key stakeholders. Satori presented their Final Report to the Panel in February 2021.

Satori noted Panel members commitment and aspiration for progress, in addition to their day jobs. However, they also observed differences of opinion, both within the Panel and across the industry, on the role and purpose of the Panel.  These differences appeared to drive different assessments of Panel performance. 

Satori’s report included several recommendations which were accepted by the Panel in February 2021.  The recommendations were split into two workstreams - a strategic roadmap to implement longer-term strategic changes and a service roadmap to support the implementation of tactical 'quick wins'.

Strategic Roadmap

To measure Panel effectiveness, the purpose and role of the Panel need to be known and clearly understood. The Panel’s responsibilities, principles and objectives to guide its decision making were set out in the market codes when the market opened in 2017. Four years into the market some stakeholders believed the Panel should have a more strategic role than the largely transactional responsibilities set out in the market codes. They also believed the Panel should facilitate innovation and customer benefit, neither of which were included in the code principles.

The first step of the Strategic Roadmap was to confirm the purpose and role of the Panel. Stakeholders such as Panel members, Ofwat and Defra were consulted on Panel Purpose and then an open consultation conducted. 

The Panel also established a Governance Sub-group to consider Panel Composition and Code Principles to support the Panel's purpose. Two proposals were raised on Panel Composition and one proposal on Code Principles.  These changes were consulted upon at the same time and subsequently Ofwat approved CPM039/CPW124: 'Revisions to Panel Composition' and CPM040/CPW121: 'MAC and WRC Principles'.

CPM039/CPW124: 'Revisions to Panel Composition' replaces the existing Panel with a Strategic Panel and a Code Change Committee.  It will be implemented in two stages beginning with the addition of Transition Schedule 14 to the Market Arrangements Code (MAC) on 1 September 2021 to mark the beginning of the Transition Period. The Transition Period will last no longer than six months, during which the Strategic Panel and Code Change Committee are appointed and the current Panel retains its responsibilities.  Ofwat granted an extension to existing Panel members' term of office to cover this period.

A Panel Nomination Committee was formed by Ofwat comprising representatives from Ofwat, Defra and MOSL.The Panel Nomination Committee's first duty was to appoint the inaugural Strategic Panel Chair, now confirmed as Trisha McAuley OBE. The Strategic Panel Chair then joined the Panel Nomination Committee to appoint Strategic Panel Members. Further information on the composition of the Strategic Panel and its appointment can be found on the Strategic Panel page.

Once appointed the Strategic Panel will appoint the Code Change Committee Chair and the Code Change Committee. Further information on the composition of the Code Change Committee and its appointment can be found on the Code Change Committe page.

Once both Strategic Panel and Code Change Committee are appointed, the Transition Period will end and enduring changes to the MAC will be implemented allowing these groups to assume the current Panel's responsibilities.

CPM040/CPW121: 'MAC and WRC Principles' replaced the principles in the Market Arrangements Code and Wholesale-Retail Code on 1 September 2021.  It establishes the primary principle in both codes of maintaining, operating and developing codes to protect and promote the interests of, and participation by existing and future Non-Household Ccustomers. It also established eight supporting principles in each code, seven of which are common to both codes. 

A clear purpose and refreshed Code Principles will underlie Strategic Panel and Code Change Committee decision making and will be used to develop strategies and specific action plans to inform MOSL's business planning.  The chart below shows how the Panel's purpose feeds into objectives, strategies and plans. If you require the chart in a more accessible format, please contact comms@mosl.co.uk.

Change Proposals

The following Change Proposals were developed by the Governance Sub-group in 2021.  Ofwat approved the implementation of CPM039/CPW124 and CPM040/CPW121 from 1 September 2021.