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A new baseline for how companies manage their infrastructure
Water companies will be required to demonstrate that their asset management systems meet a defined standard under a new licence condition proposed by Ofwat. Covering infrastructure across its full lifecycle, from acquisition through to disposal, the proposed condition would require companies to evidence compliance through either ISO certification or a qualified independent third-party assessment. Ofwat’s rationale is straightforward: good asset management is how the sector prevents ageing pipes and equipment from becoming tomorrow’s bursts, outages and pollution incidents, while ensuring that customer bill money is directed to where it will have the greatest impact.
Uneven standards have prompted regulatory intervention
The proposal follows Ofwat’s 2021 Asset Management Maturity Assessment, which revealed significant variation in standards across the sector. Progress since then has been slower than expected, prompting the regulator to embed requirements directly into company licences rather than rely on voluntary improvement. Where a company fails to meet the condition, Ofwat will apply a graduated response, ranging from requests for additional information and time-bound improvement plans, through to enhanced monitoring and, in cases of serious or persistent non-compliance, formal regulatory action.
What good looks like: lessons from the sector
Ofwat highlights two examples of asset management best practice already delivering results. Affinity Water has shifted its maintenance approach from reactive repairs to planned and preventative work, increasing the proportion of planned activity from 84% to 94%. By attaching QR codes to assets, introducing a criticality framework, and deploying condition-based monitoring on large pump sets, the company has reduced mechanical and pump failures from 1.11% to 0.5% over two years – and recorded no customer supply interruptions lasting longer than three hours from water production asset failures in the past twelve months.
United Utilities’ Dynamic Network Management programme reportedly offers a further illustration of what data-led asset management can achieve at scale. The company has integrated data from more than 25,000 sensors across its sewer network, using AI to identify patterns and respond to emerging issues before they escalate. Over five years, this approach has helped to prevent more than 8,000 blockages, 3,000 flooding incidents and over 400 pollution incidents. United Utilities is now installing a further 10,000 sensors across its network.
Have your say
Ofwat’s consultation on the proposed licence condition is open to water companies, customers, environmental groups and all other interested parties. Responses must be submitted via Ofwat’s website by 5pm on Friday 17 July 2026.: https://www.ofwat.gov.uk/consultation/consultation-under-sections-13-and-12a-of-the-water-industry-act-1991-on-proposed-licence-modifications-to-introduce-asset-management-competence-for-all-water-companies/