Click to edit Master title Open Water Workshop 29 and 30 January 2015 Review of market framework documentation in MAP2

Click to edit Master title Purpose of workshop Provide overview of the structure of the codes and agreements and how they fit together Highlight new material compared to what was reviewed at previous workshops To assist companies in preparing their responses to the consultation

Click to edit Master title Agenda Overview of documents and how they fit together Business terms and wholesale retail contract Market terms Market arrangements code Market terms code subsidiary documents Operational terms and forms

Click to edit Master title Overview of documents and how they fit together MAP2 sets out a structure for the agreements and codes needed Based on the legal tools available – primarily 1991/2014 Acts and the Competition Act 1998 Needs also to dovetail with the licensing framework – under development by Ofwat Appendix 2 – plain English description of the approach taken Note: There are still a number of moving parts

Click to edit Master title Legal overview Acts Charging Guidance Charging Rules Wholesale Tariff Document Wholesale-Retail Code Licensed Retailer Licence Wholesale Contract Interim Supply Code Appointment Exit Regs CMA Regs IS T&Cs MO C C C Wholesale Retail Undertaker P&D s BTOTMT CSDs Forms Other

Click to edit Master title Legal overview Key People and companies Legislation (primary and secondary) Licences and appointments Statutory codes and contracts Documents relating to wholesale charges Multi-lateral contract

Click to edit Master title Legal overview Licensed Retailer C C C Undertaker

Click to edit Master title Legal overview Licensed Retailer MO C C C Undertaker

Click to edit Master title Legal overview Acts Licensed Retailer Exit Regs CMA Regs MO C C C Other Undertaker

Click to edit Master title Legal overview Acts Licensed Retailer Appointment Exit Regs CMA Regs MO C C C Undertaker Other

Click to edit Master title Legal overview Acts Licensed Retailer Appointment Exit Regs CMA Regs MO C C C Wholesale Retail Undertaker Other

Click to edit Master title Legal overview Acts Licensed Retailer Licence Appointment Exit Regs CMA Regs MO C C C Wholesale Retail Undertaker Other

Click to edit Master title Legal overview Acts Licensed Retailer Licence Wholesale Contract Appointment Exit Regs CMA Regs MO C C C Wholesale Retail Undertaker Other

Click to edit Master title Legal overview Acts Wholesale-Retail Code Licensed Retailer Licence Wholesale Contract Appointment Exit Regs CMA Regs MO C C C Wholesale Retail Undertaker Other

Click to edit Master title Legal overview Acts Wholesale-Retail Code Licensed Retailer Licence Wholesale Contract Appointment Exit Regs CMA Regs MO C C C Wholesale Retail Undertaker Other P&D s BTOTMT CSDs Forms

Click to edit Master title Legal overview Acts Wholesale-Retail Code Licensed Retailer Licence Wholesale Contract Appointment Exit Regs CMA Regs MO C C C Wholesale Retail Undertaker Other P&D s BTOTMT CSDs Forms

Click to edit Master title Legal overview Acts Charging Guidance Charging Rules Wholesale Tariff Document Wholesale-Retail Code Licensed Retailer Licence Wholesale Contract Appointment Exit Regs CMA Regs MO C C C Wholesale Retail Undertaker P&D s BTOTMT CSDs Forms Other

Click to edit Master title Legal overview Acts Charging Guidance Charging Rules Wholesale Tariff Document Wholesale-Retail Code Licensed Retailer Licence Wholesale Contract Appointment Exit Regs CMA Regs MO C C C Wholesale Retail Undertaker P&D s BTOTMT CSDs Forms Other

Click to edit Master title Legal overview Acts Charging Guidance Charging Rules Wholesale Tariff Document Wholesale-Retail Code Licensed Retailer Licence Wholesale Contract Interim Supply Code Appointment Exit Regs CMA Regs IS T&Cs MO C C C Wholesale Retail Undertaker P&D s BTOTMT CSDs Forms Other

Click to edit Master title Legal overview Acts Charging Guidance Charging Rules Wholesale Tariff Document Wholesale-Retail Code Licensed Retailer Licence Wholesale Contract Interim Supply Code Appointment Exit Regs CMA Regs IS T&Cs MO C C C Wholesale Retail Undertaker P&D s BTOTMT CSDs Forms Other

Click to edit Master title Overview of documents Wholesale Contract Glue that binds things together Made under S66D/S117E of 1991 Act Short and simple bilateral contract: incorporates terms and conditions set out in the Wholesale-Retail Code Wholesale-Retail Code Part 1 – Objectives, Definitions, Principles Part 2 – Business terms Part 3 – Operational terms Part 4 – Market terms Part 5 – Code Subsidiary Documents (CSDs) Part 6 – Operational forms Market Arrangements Code MO membership and board/constitution Panel set up and membership, and change process MO budget and cost sharing

Click to edit Master title Related work DEFRA Commencement Charging guidance Exit regulations CMA appeal rights Ofwat Eligibility In-area trading ban Interim governance Licence design and transition Interim supplier code, GSS and deemed contracts Charging rules

Click to edit Master title Definitions – some useful terms Wholesaler – any undertaker appointed under section 6 of 1991 Act Retailer – any licensee Contracting Wholesaler – the specific Wholesaler signed up to the specific Wholesale Contract Contracting Retailer – the specific Retailer signed up to the specific Wholesale Contract Trading Party – all Wholesalers and Retailers (including the specific Contracting Wholesaler and Retailer) Other Wholesaler – either the Wholesaler for the other Service Category (i.e. water or sewerage); and/or where there are two Wholesalers for a Service Category at the Premises, the other Wholesaler for the same Service Category Other Retailer – as above but for retail

Click to edit Master title Wholesale Contract – Overview Bilateral Contract Parties:Contracting Wholesaler Contracting Retailer Services:Water OR Sewerage OR Water and Sewerage Effective once conditions precedent are satisfied Incorporates Wholesale-Retail Code, i.e. Market Terms, Operational Terms and Business Terms Incorporates payment obligations Gives the Market Operator the ability to enforce its rights under the Wholesale-Retail Code

Click to edit Master title Wholesale Contract Outstanding areas for further development Administrative process for signing Process for satisfaction of conditions precedent Incorporation of any additional bilateral terms

Click to edit Master title Business Terms – Introduction Part 2 of the Wholesale-Retail Code Rights and obligations of Contracting Wholesaler and Contracting Retailer Purpose – why it is needed in addition to the Contract Consists of 11 Parts Part A – Introduction Part B – Supply Part C – Warranties and Compliance with Laws Part D – Charges Part E – Default and Termination Part F – Force Majeure Part G – Indemnity and Liability Part H – Confidentiality Part I – Disputes Part J – General Part K – Data Protection

Click to edit Master title Business Terms – Overview Part B – Supply Obligation to supply Work required to develop process for requests for work Water Quality Risk and title – from Common Access Contract Meters – maintenance, size, tampering, ownership and care Service Standards – sums payable Network and Metering – includes access requirements Supply Interruptions – planned and unplanned Public Health Information

Click to edit Master title Business Terms – Overview Part C – Warranties and Compliance with Laws Contracting Retailer warrants use of water for the purpose of supplying NHH customers at the Supply Points to which Retailer is registered Each warrants compliance with Laws and Appointment/Licence Nothing prevents compliance with other laws Water Fitting Regulations

Click to edit Master title Business Terms – Overview Part D – Charges Billing timetable and standardisation Invoicing and Payment 75 days’ escrow cover for Primary Charges Reconciliation process for Primary Charges Payment – 30 days from end of month or 15 days after invoice received Credit, guarantee, escrow Invoicing and Payment of Non-Primary Charges de minimis billing

Click to edit Master title Business Terms – Overview Part E – Default and Termination Default Late or persistent payment failure – 5 Business Days’ grace Remediable breach – 10 Business Days’ grace Irremediable breach – includes notice from Market Operator Insolvency Revocation of Licence in England or in Scotland Breach of another English or Scottish wholesale services contract Force majeure continuing for six months Breach of Escrow Agreement Termination On application For Retailer default If Wholesale-Retail Code ends Requirement for disclosure to Authority and Market Operator Remain liable for charges

Click to edit Master title Business Terms – Overview Part F – Force Majeure Notify and report Relief – but not from indemnity or payment Premises by premises Part G – Indemnity and Liability Cross indemnity for damage to equipment Otherwise, direct losses only Cap – annual cap equal to aggregate Wholesale Charges in preceding year Breach of Market Terms – under development

Click to edit Master title Business Terms – Overview Part H – Confidentiality Mutual obligations that survive for 5 years after a party ceases to be bound by the Wholesale-Retail Code Standard exceptions EIRs Part I – Disputes ‘Vertical’ one to one disputes Related disputes Role of Market Operator Initial discussion, escalation and Expert determination Disputes wording and process to be discussed and developed

Click to edit Master title Business Terms – Overview Part J – General Notices Announcements Third Party Rights – Market Operator and section 205 of 1991 Act Rights Cumulative Sub-Contracting – permitted but note that test and assurance processes to be developed Use of other Party’s name Part K – Data Protection To be developed Schedule 1 – Use of Accredited Entities To be developed Schedule 2 – Key Escrow Terms 75 days’ cover

Click to edit Master title Market Terms – General Parts A-C and E Parts A-C contain MO, Retailer and Wholesaler Duties – previously Parts 2-4 of the draft market rules -Clarified that sub-contractors may submit data via their own systems once they have satisfied any market tests -Market entry process will still apply to Wholesaler/Retailer who remain responsible for performance of any sub-contractor -Outstanding point on offshoring Part E – Performance Standards, Monitoring and Issues Resolution – under development Disputes and general boilerplate – moved to Business Terms Governance – moved to Market Arrangements Code

Click to edit Master title Market Terms – General Part D Various changes in language, refinements and clarification 4.2 Introductory – language on registration, Supply Points and data – Volume transfer of Supply Points – drafting further developed Interim Supplier – allocation and transfer process further developed 4.4 Registration of New Supply Points – clarification of effective dates Gap sites – allocation process developed 4.14 Settlement timetable and reporting – RF proposed as monthly rolling 16 months from invoice period to which it relates

Click to edit Master title Market Arrangements Code Covers MO constitution, board election and funding Panel election and change process -Note: Timing of becoming a party to the MA Code, member of the MO and meeting Trading Conditions under development Board -Chair proposed as an individual with the confidence of industry stakeholders -Provisions added to enable alternates in an orderly manner (clause 4.5) -Role of board in context of retailer default under review Panel -No change to balance of members but reviewing overall size to ensure breadth of expertise -Panel scope: changes to the Wholesale-Retail Code, the Market Arrangements Code (clause 7.4) MO funding – considering how Wholesalers share MO costs between MA Code/W-R Code taking effect and market opening (clause )

Click to edit Master title Code Subsidiary Documents CSD 0003: Volume Transfer Planned New CSD, applies where -A retailer intends to sell or transfers ownership of all or part of its business or retailer change of name -A wholesaler is to sell/exit or cease to hold an Appointment for all or part of its area or wholesaler change of name Essentially a planned event where the identity of the recipient is known Market terms set out the requirements/ preconditions CSD contains the process for planning the transfer of SPIDs and final allocation Role of the MO set out – Note: need to reflect on appropriate data exchange mechanism for bulk notifications Up to two month window for transfer meter reads, depending on scale of the exercise

Click to edit Master title Code Subsidiary Documents CSD 0004: Interim Supplier Allocation Process Process envisages coordination with the Authority – needs to be reviewed further Sets out the process for a Retailer to confirm to the MO that it wishes to be an opted in Retailer for purposes of Interim Duty Code Sets out process for MO to follow in undertaking the allocation process Retailer that elects to be opted in has to notify the MO annually prior to the start of the year – note provision for temporary suspension MO to publish and keep updated a list of opted in retailers Description of methodology Pending transfers in will be cancelled and pending transfers out accelerated Registration and notification of all information to the new Retailer Up to two month window for transfer reads, depending on scale of the exercise

Click to edit Master title Code Subsidiary Documents CSD 0005: Gap Site Allocation Process Applies to wholesaler-found gap sites -Note: Retailer found gap sites allocated to the finding retailer by the relevant wholesaler Sets out the process for the MO to establish and publish a list of retailers who are automatically opted in by area Process for other retailers voluntarily to opt in -The opt in criteria set out in the CSD Methodology for allocation of sites by service category -Principles set out in the CSD

Click to edit Master title Code Subsidiary Documents CSD 0101 Registration: New Supply Points Refinement of the registration effective dates CSD 0102 Registration: Transfers Removed requirement for a read when reversing an erroneous transfer Clarified arrangements for sewerage retailer to read meter reads on transfer Clarified meter reading arrangements for meter networks – need for a notification Introduced new provision to allow for an estimated transfer read in certain circumstances - in line with recent change agreed in Scotland

Click to edit Master title Code Subsidiary Documents CSD 0104 Maintain SPID Data Significant restructuring of the CSD to make more logical linked to the SPID data structure New overview table at page 7 describing the structure of the CSD New generic process and transaction table references New process areas include: -RV/ legacy RV -Billing contact and decision maker contact details -Multiple wholesalers at the same SPID -Moving meter between SPID and service component -Area of premises and % draining

Click to edit Master title Code Subsidiary Documents CSD 0105: Error Rectification and Retrospective Amendments New material setting out the principles of the approach – the detail will require further development Sets out the controlled process for dealing with errors in data items held on the central systems, i.e. provides a mechanism for making data corrections Assumes the policy dealing with data changes is set out elsewhere, e.g. the approach to changes having retrospective effect Sets out general principles – only the data owner for the relevant period of time can make data corrections Distinguishes between corrections with no impact on charging and those which have, the latter requiring levels of authorisation Provides for particular circumstances having a specific process, e.g. applications to change data under the vacancy scheme CSD sets out the process steps

Click to edit Master title Code Subsidiary Documents CSD 0106: Non market meters Drafting alignment Data owner of sub meter to take transfer read CSD 0201: Settlement timetable and reporting Proposed RF as a monthly rolling RF, 16 months following the invoice period to which it relates -Note: Still in discussion with companies on questions posed following last workshop and will review further when charges are published Settlement reports to be developed when charges and settlement requirements confirmed CSD 0202 and CSD 0203: Meter Read Submission Process and Validation Estimated transfer read where relevant and removal of read to reverse an erroneous transfer Taking advice on some meter reading points

Click to edit Master title Code Subsidiary Documents CSD 0206: Trade Effluent Processes Allows for wholesaler provided volumetric allowances, i.e. as for water and sewerage Allows for retailer provided volumes in the case of certain private ‘meter’ types, e.g. leachate measurement meter read equivalent CSD 0207: Charge Calculation, Allocation and Aggregation Substantial drafting changes, consistent with the approach set out in the slides in previous workshops Sets out the wholesale charges components Process for each category of charges Caters for non-standard agreements, Schedule 66EA departures, government contribution Will review company charges schemes following publication Questions outstanding in relation to treatment of vacancy and temporary disconnection Next step is to develop drafting to reflect the detailed algebra required to undertake the calculations

Click to edit Master title Code Subsidiary Documents CSD 0208 Submission and Validation of Wholesaler Tariff Data New CSD and will need further update following publication of wholesale charges Sets out the process for the submission, maintenance and update of wholesaler tariff data where there is a change to the values -Note: A new charging methodology will need impact assessment and any Code changes will need to be consistent with Code governance Timetable for any annual tariff changes and assumes changes made within a window Sets out approach to verification and confirmation Appendix 1 contains the data required for each tariff Appendix 2 contains tariff standing data

Click to edit Master title Code Subsidiary Documents CSD 0301: Data Transaction Catalogue Contains updated material on all data items and transactions referenced in all the CSDs as published Will continue to be updated as new data items or transactions are identified Currently looking at the structure of the data items Also planning to produce an excel version for providing to companies

Click to edit Master title Operational Terms Limited changes to the processes following the workshop held in November H1 Application for an allowance includes change to % area draining H2 Review of unmeasured supply points or assessed charges – process refined and less specific to the relevant scheme H4 and H5 processes allow for gaps site and vacant premises incentive schemes – do not include the rules of the schemes Working on: -Part E, Unplanned and will update that section following review with DWI and Defra -Mapping all processes

Click to edit Master title Operational Terms Forms All forms reformatted and new data items added /amended based on previous workshops and actions and comments arising Will review the need for further forms, including for -Process I7, gaining entry using wholesaler’s power of entry at retailer request Will also review what data is mandatory/ optional for the relevant stage of the process and clarify -Presumption that data is mandatory within the relevant context -Need to review data end-to-end aligned with CSD 0301 to ensure all market data items are catered for