Ofwat takes hard line on Thames Water's failure to achieve leakage target

Responding to Thames Water's failure to achieve its leakage target for 2005-06, Ofwat said: "We view as very serious Thames Water's significant failure to achieve its leakage target for 2005-06 by 34 Ml/d. This follows its failure to achieve its 2004-05 target by 10 Ml/d." The company's leakage targets were 860 megaliters a day (Ml/d) for 2005-06 and 905 Ml/d for 2004-05. A Megaliter is the equivalent of one million litres. It would take 2.5 Ml of water to fill an Olympic-size swimming pool...

BIRMINGHAM, UK, June 21, 2006 -- Responding to today's announcement by Thames Water that it has failed to achieve its leakage target for 2005-06, Ofwat said: "We view as very serious Thames Water's significant failure to achieve its leakage target for 2005-06 by 34 Ml/d. This follows its failure to achieve its 2004-05 target by a smaller margin of 10 Ml/d. Given its current leakage performance we are concerned that the company may not meet future leakage targets or its security of supply commitments."

The agency said it had only just received the annual return from Thames Water and was still awaiting an assessment from the Independent Reporter, both of which it will be scrutinizing carefully before deciding on regulatory action.

Thames Water's leakage targets were 860 Megaliters per day (Ml/d) for 2005-06 and 905 Ml/d for 2004-05. A Megaliter is the equivalent of one million litres. It would take 2.5 megaliters of water to fill an Olympic-sized swimming pool.

"Customers are paying the higher prices that Thames Water has been allowed to charge -- an average increase of 24% over 2005-10, excluding inflation -- without getting all the benefits that the company has promised to deliver. This is unacceptable," said the agency in a statement released on the Government News Network.

"Although the current drought is the result of below average rainfall for two consecutive winters, we expect Thames Water to set a good example by controlling its leakage. The company's poor leakage performance is not only inefficient, it is also contributing to water shortages that have led Thames Water to impose a hosepipe ban and seek a drought order.

"Meeting its leakage targets should be a very high priority for Thames Water. We expect the company to spend as much as is necessary to remedy its leakage failure and ensure that it delivers value for money and security of supply for its customers.

The Water Services Regulation Authority (www.ofwat.gov.uk) is the economic regulator of water and sewerage companies in England and Wales. It exercises its powers in a way that it judges will allow companies to carry out their functions properly, and finance them. Its duties include protecting the interests of consumers, wherever appropriate by promoting effective competition. The Authority succeeded the Director General of Water Services, or Office of Water (Ofwat), on April 1, 2006.

Also see:
-- "Defra - Water Saving Group outlines progress on action plan on long term water supply"
-- "Ofwat consults on Agbar's acquisition of Bristol Water"
-- "Ofwat proposes financial penalty on Severn Trent Water for customer services failures"
-- "Yorkshire Water pleads guilty to charge of supplying water unfit for human consumption"

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