Market Performance Framework (MPF) Reform

The market has come a long way since the current Market Performance Framework (MPF) was established when it opened in April 2017. The current MPF is a group of mechanisms that govern, monitor and incentivise trading parties to deliver a set of service standards in order to comply with market codes.

There is evidence that the current MPF does not always drive improved outcomes for customers, the market or the environment. It is therefore crucial that the MPF reform programme looks at how the incentives in the market could be reformed to ensure they are driving the right behaviours, the appropriate focus from those with accountability for delivery, and positive customer outcomes.  

The need for a ‘root and branch’ reform of the MPF was highlighted not only by MOSL, but by Ofwat and trading parties.

The MPF Reform programme is one of the five key market improvement programmes in MOSLs 2022-25 Business Plan. The programmes are all interdependent and will heavily inform one another as they work towards enabling improved customer outcomes and reduced market frictions.

Timeline

 The MPF Reform programme will be delivered in two phases:

  • Phase one – is identifying the risks and issues that prevent the market delivering on its desired outcomes as well as the activities that could enable the delivery of these outcomes as part of a future MPF. It will also identify the types of interventions that could form part of an MPF by January 2023. A potential conclusion of phase one could be that the existing incentives on trading parties mean that no MPF is needed going forward.
  • Phase two – will comprise the detailed design and implementation of the preferred MPF model. This will include the development of specific measures, performance standards, and associated incentive mechanisms, as required. We anticipate the work on these elements will be completed through 2023 and 2024. The scope and duration of phase two will be influenced by the outcomes of phase one.

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