21/06/2006

Thames Water misses target on reducing leaks

Thames Water has missed its target for reducing leaks for the third consecutive year, it has been revealed.

The water firm had a target, set by water regulator Ofwat, of losing no more than 860 million litres of water per day. However, the company missed its target by 34 m l/d.

However, Thames Water also announced a 31% rise in profits to £346.5 million.

Recently, the company was forced to apply for a drought order, amid fears that the south-east of England is facing its worst drought for a hundred years this summer.

The order will affect London, as well as parts of Kent and Surrey, where a hosepipe ban is already in place.

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

"Customers are paying the higher prices that Thames Water has been allowed to charge - an average of 24% over 2005/10, excluding inflation - without getting all the benefits that the company has promised to deliver. This is unacceptable.

"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."

Ofwat also said that it was still waiting for the assessment from the Independent Reporter and will be scrutinising both carefully before deciding on regulatory action.

The Consumer Council for Water said that Thames Water's failure to meet its leakage targets was "totally unacceptable" to consumers and would rub salt in the wounds of consumers facing bill increases and water restrictions over recent on their water use this summer.

Chairwoman Dame Yve Buckland said: "Their customers will also be paying 24% bill increases to the company between 2005 to 2010 and now have every right to question whether they are getting what they paid for. We look to the financial regulator, Ofwat, to consider its powers to punish Thames. Meanwhile, we urge the company to consider making next year's bill increase lower - or plough the money back into the service to address its failures."

(KMcA/SP)

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