Thames Water hit with £120 million penalty over leakages

Steve Robertson, CEO, Thames Water

Thames Water, the UK’s largest water company which covers London, has agreed to pay £65 million back to customers as part of a package of payments and penalties worth £120 million.

This follows an investigation by the UK’s water watchdog, Ofwat, which found that the utility’s board did not have sufficient oversight and control of the company’s leakage performance.

“High leakage creates unnecessary strain on the environment, excess costs for customers and increased risk of water shortages,” said Rachel Fletcher, Chief Executive, Ofwat. “A well-run water company will have a good understanding of the condition of its pipes and will be able to reduce leakage over time.”

The £65 million payment to customers is on top of £55 million in automatic penalties incurred by the company for missing the commitment it made to customers to cut leaks. Each customer will get a total rebate of approximately £15 over the next two years.

Ofwat has set all water companies a target of bringing down leakage by at least another 15 percent up to 2025 and expects further reductions beyond this date.

“We met our leakage targets for a decade but our recent performance has not been good enough,” explained Steve Robertson, CEO, Thames Water. “We let our customers down and for that we’re sorry. We have taken more control of how we manage the network and are investing significantly more in people and resources to tackle leakage, get back on track and then go beyond.”

As part of the proposed settlement, the company 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, and do more to engage with customers on leakage issues–including at its board.