[Report] Market Competitive Intensity: UK TOC

CATALYST
SUMMARY
ANALYSIS
- Introduction: MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity
  - The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment
  - The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull.
  - The MCI Index measures the development of 20 diverse European gas and power markets
  - The MCI Index assesses markets in December 2006 and on 1st July 2008 in addition to driving a market switching forecast
  - Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details)
  - Two differing overall MCI scores are calculated to ensure full clarity of results
    - A simple weighted average (additive) measure shows overall competitive intensity
    - A weighted multiple (multiplicative) measure shows overall competitive intensity
  - The MCI framework has a number of applications for your organization
- Context: As Europe' s most competitive gas and power market, the UK is ranked at the top of the scale in both gas and power
  - The UK' s power score is considerably ahead of the second and third placed markets
  - In common with the power market, the UK is considerably ahead of all the other gas markets surveyed
- Power MCI: All of the UK' s power scores are at the upper end of the scale
  - The UK' s Market Framework metrics all achieve scores at the top end of the scale
    - Effectiveness of Regulator [2006: 6.6/10 2008: 7/10]
    - Ease of Third Party Access [2006: 9/10 2008: 9.5/10]
    - Effectiveness of Balancing and Data Transfer [2006: 8.7/10 2008: 9.1/10]
  - Supplier Push metrics are driven by the existence of a fragmented wholesale market and the well developed traded market
    - Wholesale Market Fragmentation [2006: 8/10 2008: 8/10]
    - Retail Market Fragmentation [2006: 5.5/10 2008: 7/10]
    - Traded Market Maturity [2006: 6.3/10 2008: 7.4/10]
  - All of the UK' s Customer Pull metrics score at, or close to, the top end of the scale
    - Access to Market Information and Assistance [2006: 9.4/10 2008: 9.6/10]
    - Consumer Representation [2006: 7.5/10 2008: 7.7/10]
    - Propensity to Switch [2006: 5.9/10 2008: 6.2/10]
  - Switching activity will continue to develop in the UK, though at a slower rate than in the less developed markets
- Gas MCI: Four of the 9 metrics in the UK achieve the highest possible score
  - The developed and fully deregulated nature of the UK market allows it to achieve the highest Market Framework score in this study
    - Effectiveness of Regulator [2006: 7.5/10 2008: 7.5/10]
    - Ease of Third Party Access [2006: 10/10 2008: 10/10]
    - Effectiveness of Balancing and Data Transfer [2006: 10/10 2008: 10/10]
  - The only Supplier Push factor to not score highly in the UK is Retail Market Fragmentation
    - Wholesale Market Fragmentation [2006: 8.7/10 2008: 9/10]
    - Retail Market Fragmentation [2006: 6.5/10 2008: 6.5/10]
    - Traded Market Maturity [2006: 10/10 2008: 10/10]
  - High levels of switching, and facilities to assist this switching, result in high Customer Pull scores
    - Access to Market Information and Assistance [2006: 10/10 2008: 10/10]
    - Consumer Representation [2006: 8/10 2008: 8.3/10]
    - Propensity to Switch [2006: 9/10 2008: 9/10]
  - Switching rates will continue to develop, though at a slower rate than in other markets given the already advanced stage of liberalisation previously reached
- Outlook: The developed nature of the UK market means that commercial opportunities tend to lie outside of the retail part of the value chain
  - The UK unsurprisingly achieves the highest competitive intensity scores in both the gas and power markets
    - Power scores
    - Gas scores
  - Commercial opportunities do exist in the UK power market, though the high level of competitive intensity means that they are more difficult to capitalise on than in other less advanced markets
    - New Market Entrant Opportunities, Power
    - New Market Entrant Threats, Power
  - The strong level of competitive intensity in the UK means that the market place is in many ways crowded
    - New Market Entrant Opportunities, Gas
    - New Market Entrant Threats, Gas
- MCI Scores
APPENDIX
- Definitions
- Ask the analyst
- List of Tables
  - Table 1: Market Competitive Intensity, UK 2006-08
  - Table 2: MCI Additive, Europe 2006-2008
  - Table 3: MCI Multiplicative, Europe 2006-2008
- List of Figures
  - Figure 1: MCI Assessment Scale
  - Figure 2: MCI Assessment Framework
  - Figure 3: MCI Market Coverage
  - Figure 4: MCI Scales
  - Figure 5: MCI Applications
  - Figure 6: European Power Market Competitive Intensity, 2006-08
  - Figure 7: European Gas Market Competitive Intensity, 2006-08
  - Figure 8: Power Market Competitive Intensity, UK
  - Figure 9: Switching Forecasts, UK 2008 [Residential: 58% Non Residential:6%]
  - Figure 10: Gas Market Competitive Intensity, UK
  - Figure 11: Switching Forecasts, UK 2008 [Residential: 59% Non Residential:62%]
  - Figure 12: Market Competitive Intensity, UK
  - Figure 13: Scale for MCI Assessment, Effectiveness of Regulator
  - Figure 14: Scale for MCI Assessment, Ease of Third Party Access
  - Figure 15: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer
  - Figure 16: Scale for MCI Assessment, Wholesale Market Fragmentation
  - Figure 17: Scale for MCI Assessment, Retail Market Fragmentation
  - Figure 18: Scale for MCI Assessment, Traded Market Maturity
  - Figure 19: Scale for MCI Assessment, Traded Market Maturity
  - Figure 20: Scale for MCI Assessment, Access to Market Information and Assistance
  - Figure 21: Scale for MCI Assessment, Consumer Representation
  - Figure 22: Scale for MCI Assessment, Propensity to Switch

Market Competitive Intensity: UK

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