Leakage slightly down - companies warned against complacency

Aug 16, 2006

Leakage by water companies in England and Wales fell by around 20 million litres a day (Ml/d) in 2005-06, figures released today by Ofwat reveal. Overall leakage in England and Wales was close to 3,600 Ml/d, compared to nearly 5,000 Ml/d just a decade earlier.

Most of the 22 companies met or performed better than the target set for 2005-06 by the water industry regulator. Star performer was Folkestone and Dover Water which beat its target of 8.4 Ml/d by nearly five per cent (Ml/d = Megalitres per day; a megalitre equals one million litres). The company was recently successful in gaining water scarcity area status, which gives it the right to impose metering on householders to reduce demand.

But four companies have failed to hit their targets with Thames Water and Severn Trent Water named as the worst offenders.

Ofwat has already taken action to require Thames Water to make a substantial reduction in leakage, and the company has entered into a legally binding agreement with the regulator committing it to spend £150 million of its own money to step up the programme of water mains replacement. It also risks being fined if it does not meet its future leakage targets.

Reported leakage by Severn Trent rose by 40 Ml/d, of which nearly half was accounted for by changes in the way in which it was calculated. But the remainder was a real increase. The company has committed to an action plan to meet its target for 2006-07 and beyond.

United Utilities, which supplies north west England, has failed to meet targets in recent years and is already following a recovery plan required by Ofwat. While the company remained 7 Ml/d behind the target for 2005-06, it is making progress in line with its recovery plan and Ofwat expects it to meet all its targets in 2006-07 and beyond.

Southern Water had a very small failure of 0.75 Ml/d, but remains within the three-year rolling average target. The company has now taken on more staff to fix leaks and in May was ahead of its target for 2006-07.

Ofwat's Chairman Philip Fletcher said: "We have already taken action against Thames Water for its poor leakage performance. Severn Trent is on notice that we will consider using our formal enforcement powers in the event of any further failure."
"During a drought we expect companies to give a clear lead to consumers on the importance of conserving water. Companies have told us informally that they have made further leakage reductions since the end of March. This should follow through to significant improvements next year in those companies that are affected by the drought and those that have failed their leakage target in 2005-06."

Ofwat is now beginning a review of how leakage targets are set, and will work on this with the Department for Environment, Food and Rural Affairs (DEFRA), the Welsh Assembly Government, the Environment Agency, Consumer Council for Water (CCWater) and other stakeholders. The current approach, which requires companies to take account of the operational, environmental and social costs of reducing leakage, continues to provide effective leakage targets for use in water resource planning. However, Ofwat recognises that there are lessons to learn from the experience of companies managing leakage in the current drought and over recent years.

The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. It exercises its powers in a way that it judges will allow companies to carry out their functions properly, and finance them. Its duties include protecting the interests of consumers, wherever appropriate by promoting effective competition. The Water Services Regulation Authority succeeded the Director General of Water Services on 1 April 2006.

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