Leaks anger at Ofwat

Leakages remains an area for concern within the UK water industry, according to Ofwat, which regulates the water and sewerage sector in England and Wales.
Ofwat’s ’Service and Delivery’ report for 2009-10 showed that six out of 21 companies failed to meet their leakage target.

The companies that failed were: Cambridge (1.4% over its target); Dee Valley (2%); Northumbrian (Essex and Suffolk 1.5%, North East 3.3%); Southern (3.3%); Veolia Central (3.6%); and Yorkshire (7.3%).

The leakage failures occurred in the context of the coldest winter for more than 30 years. All companies reported high numbers of burst pipes because of ground movement caused by freezes and thaws.

Regina Finn, Ofwat’s chief executive officer, said that if companies continue to underperform, the reguilator will take action.

“In the last five years, companies have had to pay out more than £500 million, from their own pockets, following underperformance. We’ve made sure that the bulk of this money has been spent on giving something back to customers – either through reduced bills or investment in improving services.

“That’s why when certain companies consistently failed to manage leakage, we made sure they invested an extra £195 million of shareholders’ money putting the problem right.”

Although last year’s leakage failures did not put customer supplies at risk, said Finn, future challenges such as climate change and population growth mean that valuing this precious resource is more important than ever before.

Ofwat has put in place monitoring arrangements for five of the companies who failed, which will enable the regulator to take appropriate action should they fail to meet their leakage targets in the future.

Ofwat is still in the process of investigating Yorkshire Water’s leakage failure, and how the company reports its leakage.