Water companies should consider separating business units: Gemserv


Paul WittonDaurisThe opening up of the retail market for non-household water customers now less than two years away. In this sponsored post, Paul Witton-Dauris, Business Development Manager (Water) for Gemserv, says companies need to take a proactive approach to ensure they are compliant.

Open Water’s market architecture plan advised water companies preparing for retail competition to focus their immediate efforts on ensuring they meet Level Playing Field requirements.

That means doing their bit to ensure all retailers in the market have equal opportunity to compete for customers, irrespective of their size, history or relationship to the wholesaler.

As 2017 nears, exactly how companies should go about this is far from clear. The Water Act does not prescribe legal separation and other competitive markets sport a variety of different models and degrees of wholesale/retail division.

Ultimately the buck will stop with the water companies and a proactive stance towards these issues is advisable.

Whilst it will be for each company to decide its own precise course of action, our experience in other markets leads us to recommend that a clear, organisational separation is advisable.

Among other things, this helps water companies align their operations with the new market which is structured on the basis of retail and wholesale activities and also that it protects against potential legal action and reputational damage.

Companies will have to make a call in regard to areas such as IT and finance as to where to strike the balance between ensuring compliance and footing the bill for implementing change.

However, there are two sensible ‘early actions’ companies should consider: splitting out their activities supporting non-household customers into a separate organisational unit and location; and putting up ‘Chinese wall’ information barriers to prevent information exchanges that may breach commercial confidentiality.

More broadly, we are encouraging any company not already underway with Level Playing Field preparations to implement an organisational structure consistent with the likely demands of the competitive market and to ready their compliance arrangements.

Each company should also be designing and implementing its market readiness programme, so it is able to engage with all stakeholders in the market in a timely fashion.

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