Bilateral Transactions Programme
The Bilateral Transactions Programme is one of the key programmes through which MOSL aims to make it 'easier to do business' in the non-household water market and is one of the most fundamental developments since the market opened in 2017.
This section explains what a bilateral transaction is, why they are so important to the effective functioning of the market and provides a central location for all market participants to find out more about the process of the programme.
MOSL’s primary objective, as set out in our business plan, is to make the non-household market an 'easier place to do business' in.
The market has come a long way since it opened in April 2017, but many of the companies operating in the market – and the regulator – want to see “a faster, simpler, more reliable way of managing bilateral interactions between wholesalers and retailers.”
The bilateral transactions hub
In September 2021 MOSL launched a centralised bilateral transactions 'hub', which all trading parties use to initiate and manage bilateral transactions. At the same time the first standardised bilateral process was launched; the 'meter verification and supply arrangements' process or 'C1s'.
Trading parties can access the hub via a web portal for low volumes of transactions, or system-to-system integration for high volumes.
The next tranche of bilateral processes is due to launch in May 2022, with subsequent phases due to go live on 2 August, 29 September and 30 November 2022.
For an overview of the programme, please click here.
Evolution of a solution
From its position at the heart of the non-household market, MOSL is ideally placed to work with its water company members to develop a solution to this key issue.
Improving bilateral transactions will not only improve the speed, accuracy and quality of service that customers receive, it will also help reduce costs for companies operating in the market.
The Bilateral Transactions Programme is considered to be “the most fundamental development since market opening."
'Bilateral transaction' is a complicated-sounding term for something that is, in essence, very simple.
In the non-household water market, retailers ‘own’ the relationship with customers. The retailer is responsible for the quality of service that a customer receives and nearly all communications with them.
The water itself is supplied - and taken away - by one of 26 regional wholesalers, who own the water and water infrastructure. They also own and maintain customers’ water meters. However, in the non-household market, wholesalers only contact customers directly in certain circumstances, e.g. if their water supply is cut off unexpectedly (i.e. there is an ‘unplanned outage’).
When serving their customers, retailers often need to liaise with wholesalers to get a particular job done, such as fixing a water meter. There is therefore a two-way – or ‘bilateral’ – relationship.
Each request, instruction or process update that passes between the retailer and wholesaler is referred to as a 'bilateral transaction.’ Each process often involves multiple bilateral transactions.
These bilateral transactions normally take place behind the scenes, without the customer needing or wanting to be aware – they should just happen. The customer usually only becomes aware of the interplay between wholesalers and retailer when something doesn’t go to plan.
The importance of ensuring that all companies adopted a consistent approach to bilateral transactions was recognised prior to the opening of the non-household water market in April 2017.
However, in order to ensure the market opened on time it was agreed that the bilateral programme would be taken out of scope from the Open Water programme and revisited after launch.
As a result of this decision, each trading party (26 wholesalers, 35 retailers as at 31 March 2020) developed its own, often unique, procedures and protocols for delivering the processes defined by the market codes.
This has led to hundreds, possibly thousands of different combinations and permutations of processes in the market; each a point of potential delay and/or failure.
While on a single retailer to single wholesaler basis these processes may be relatively smooth, the more wholesalers a retailer works with, the more complicated and cumbersome the processes become.
Both the industry and MOSL consider bilateral transactions to be ‘unfinished business’. You can read more about MOSL’s perspective in the June 2020 edition of The Water Report.
The current bilateral programme, which was initiated in February 2020, builds on the lessons of previous projects and is the most concerted effort to date to deliver this important programme.
The primary goal of the bilateral transactions programme is to improve the speed and quality of service that water companies provide to their non-household customers.
These customer improvements will be created by a programme that:
- Adopts a consistent approach to raising and responding to bilateral requests between wholesalers and retailers
- Facilitates simpler, leaner and faster operational processes
- Increases automation, making better use of central data and reducing the number of bilateral transactions that are rejected
- Requires trading parties to use fewer user accounts and logins, reducing the need for manual intervention
- Enables more transparent performance levels that are easier to compare and report; helping to drive continued improvements in the industry’s performance
Although the programme aims to make a significant improvement to issues currently relating to bilateral transactions, it is not a panacea. Market participants will need to continue to drive improvements, both individually and collectively, particularly in relation to data quality.
As well as improvements in bilateral processes, the programme will also significantly increase the visibility and measurability of individual processes at both an individual company and market level.
This information can then be used to measure performances, identify issues and drive further efficiency in the market.
MOSL is working with market participants to implement a centralised bilateral transactions 'hub' to initiate and manage all bilateral transactions.
The bilateral transactions programme is not simply an IT implementaotin, it is an industry-wide endeavour that requires extensive engagement and cooperation across the industry at every stage.
The bilateral hub and first standardised industry-wide process - verification of water meters and supply arrangements - went live in September 2021.
More phases will be released in phases between May 2022 and November 2022, when the programme is due to end. Any remaining processes, which will be used relatively infrequently, will be delivered after this point as 'business as usual'.
Trading parties can access the ‘hub’ via:
- Their own portal(s)
- The MOSL web portal
- The ‘low volume interface’ or LVI (i.e. for low volumes of entries)
- System-to-system integration (the 'high volume interface' or HVI)
It is mandatory for market participants to interface with the MOSL ‘hub’ to use process(es) as they go live. Which route companies choose to take will be up to them.
MOSL has identified approximately 70 bilateral transactions that are within scope of the programme, of which approximately 15 represent the vast majority of transactions in terms of volume and/or customer-impacting issues. The top eight processes alone account for 80 per cent of the volume of bilateral processes in the non-household market.
MOSL has adopted a flexible, 'agile' style approach to implementation. Each process analysed, defined, developed, tested and implemented in turn in order to provide maximum benefit to the market – and therefore customers – as quickly as possible.
This approach also reduces many of the risks traditionally associated with ‘big bang’ software implementations.
There are just under 70 bilateral processes in the market (67 to be exact), of which the top eight represent approximately 80 per cent of the most important transactions by volume and/or impact on customers.
The order in which MOSL will address the processes is based on a number of factors, including not only quantitative factors, i.e. the volume of transactions, but also qualitative factors, e.g. processes that are creating the most significant customer-impacting issues.
You can find out more about the order in which MOSL is addressing bilateral transactions and the progress we are making here.