Michael Gove said: “Thames Water completely failed in their duty of care to their customers, leaving them to suffer leaks for far too long through poor management. But actions speak louder than words, and they must deliver on their commitment to provide compensation and much-needed improvements to customers. “This is exactly the kind of decisive action Ofwat should be taking, and shows an ongoing commitment to ensuring that customers receive the service they deserve. I fully support Jonson Cox and his team’s work to hold the water industry to account.” The Environment Secretary previously spoke about the future of the water industry in his speech at the Water UK conference in March.
Ofwat: PN 22/18: ‘Thames Water’s failure to tackle leakage results in £65m package for customers
Thames Water has today agreed to pay £65M back to customers as part of a package of payments and penalties worth £120M. This follows an Ofwat investigation which found that Thames Water’s Board did not have sufficient oversight and control of the company’s leakage performance.
The £65M payment to customers is on top of £55M in automatic penalties incurred by the company for missing the commitment it made to customers to cut leaks. Following Ofwat’s investigation, Thames has committed to bring forward the payment of these automatic penalties. This means that Thames’ shareholders will return a total of £120M to customers.
As a result, each Thames customer will get a total rebate of approximately £15 over the next two years.
Ofwat’s investigation found that Thames Water breached two of its legal obligations through poor leakage management. It concluded that Thames Water’s Board and management did not pay enough attention to reducing leakage and that the company underestimated the significance of its underperformance on leakage when assuring Ofwat that it was meeting its statutory obligations, one of which is to deliver an efficient and economic service.
As part of the proposed settlement, Thames Water has committed to getting its leakage performance back in line with what it has promised it will deliver for its customers in 2019-20. It will also publish its performance each month in tackling leaks, appoint an independent monitor to certify the information in its monthly leakage reports, make additional leakage reductions of 15% by 2025 and do more to engage with customers on leakage issues – including at its Board.
Thames Water has also pledged to provide Ofwat with more detailed evidence to assure that it is meeting its statutory obligations in relation to leakage and improving its management control over the delivery of core operational functions.
United Utilities has been fined a total of £200,000 and additional costs of £54,000 at a sentencing hearing in Bolton Crown Court this week. On 30 January 2018, the water company pleaded guilty to supplying inadequately disinfected water from the Sweetloves water treatment works in Bolton on two occasions. The charges were brought by the Drinking Water Inspectorate – commenting on the court’s sentencing decision, Marcus Rink, Chief Inspector of Drinking Water said:
‘These were serious failures by the company to maintain control of water treatment processes, and which have been duly recognised by the court. The Inspectorate will continue to require the company to meet the drinking water quality standards in place to protect consumers’. The charges relate to two events between 31 March – 3 April 2015 and 19 July – 22 July 2015. Sweetloves Water Treatment Works is located approximately 3 miles to the North of Bolton. At the time of both events, the works was supplying a total population of just under 80,000 people.