Market Governance Review

Robust, efficient, and effective governance is an essential component of a well-functioning market.  Four years on from market opening, the Panel wanted to review whether governance arrangements were fit to deliver stakeholder expectations of the market. MOSL worked with the Panel to review market governance arrangements and Panel effectiveness.  This page includes the findings from the Panel Effectiveness Review, led by Satori Board Review, and the resulting steps to implement its recommendations.

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.

Service Roadmap

Satori identified a range of quick wins and working practice adjustments to improve Panel performance and the code change delivery service.  These include improving transparency and communication, enhanced meeting protocols, and improvements to the consideration and prioritisation of code changes.  For more information please refer to Satori’s Final Report. The Panel intends to implement these 'quick wins' alongside the development and delivery of the Strategic Roadmap. 

Panel

Role: Programme sponsor and client

Members: Panel Members

ToR: Panel Terms of Reference

Governance Sub-group

Role: Delivery of change proposals

Members: Angela Day (MOSL, Chair), Christina Blackwell (CC Water), Christopher Wright (Castle Water), Dan Mason (Ofwat), Elsa Wye (Panel Member), John Vinson (Consultant), Julian Tranter (Thames Water), Neil Pendle (Waterscan), Rupert Redesdale (The Water Retail Company)

ToR: Subgroup Terms of Reference

Governance Steering Group

Role: Programme management

Members: Trisha McAuley (Chair), Pamela Taylor (Independent), Martin Mavin (Wholesaler), Nicola Smith (Retailer) Dan Mason (Ofwat), Adam Richardson (MOSL)

ToR: June 2020 Panel Workstreams Update (Section 4)

Strategic Stakeholder Group

Role: Consultation body

Members: Dan Mason (Ofwat), Sarah McMath (MOSL CEO), Kruti Patel (Defra), Mike Keil (CC Water), Trisha McAuley (Panel Chair)

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.

CPM021/CPW125

Panel membership and voting rights

View Change

CPM039/CPW124

Revisions to Panel Composition

View Change

CPM040 & CPW121

MAC and WRC Principles

View Change

Keep up to date

Receive the most relevant and up-to-date communications from MOSL by signing up to our mailing list.