Thames Water escapes fineWater giant to spend £150 million on improvements

04 July 2006

The UK's biggest water supplier Thames Water has escaped a fine for failing to meet its leakage target.

Instead the company, which loses 894 million litres a day, must spend an extra GBP 150 million on improvements.

Industry regulator Ofwat could have fined Thames Water GBP 66 million, 10 per cent of the company's water service turnover of around GBP 660 million.

But the regulator said a fine would have gone to the Exchequer rather than benefiting customers.

Last month it was revealed that Thames Water had missed its target for reducing leaks for the fourth year running. At the same time it announced profits were up by 31 per cent.

Unacceptable failure

Philip Fletcher, Chairman of Ofwat, explained why it had not fined the water giant.

'Thames Water's failure on leakage is unacceptable. Our job as regulator is to protect customers, who have been outraged by Thames' inability to control leakage sufficiently in London.

'Thames has bound itself to spend an extra GBP 150 million, at the cost of its own shareholders, to replace more ageing pipes than planned. This will directly address the issue of London leakage and achieve more secure supplies.

'It is more than double the maximum possible fine which the regulator could have imposed. A fine would not have gone to protect customers, but to the Exchequer. This is the right answer for Thames' customers and for London.'

The extra expenditure will replace at least 368km of extra mains in addition to the 1,235km which Thames Water is already in the process of replacing in London, over the next four years.