Ofwat attacks Thames Water profits
Ofwat attacks Thames Water profits
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Wednesday, 21, Jun 2006 06:30
Government water industry watchdog Ofwat has condemned Thames Water's profits, announced earlier today, as "unacceptable".
The industry regulator attacked the 23.2 per cent improvement in operating profit by the London-based water company because it had not met its required targets for reducing leakage from its pipes, a "very serious" failure according to Ofwat.
Thames Water has attracted such criticism because it has increased prices by an average of 24 per cent in the last year while simultaneously failing to deliver the improvements it has promised.
"Meeting its leakage targets should be a very high priority for Thames Water," Ofwat said.
"We expect the company to spend as much as is necessary to remedy its leakage failure and ensure that it delivers value for money and security of supply for its customers."
Thames Water's annual trading results, released today, make pains to highlight the increased spending the company has made on improving its infrastructure to tackle the leakage problems.
It emphasised the long-term nature of its leakage improvements, pointing out that its £3.1 billion investment plan would reduce leakage and improve the "security of supply of drinking water supplies" by 2010.
"Given our strenuous efforts to reduce leakage, it’s immensely frustrating to have missed our London target, but we are determined that our biggest-ever capital investment programme will enable us to meet our leakage target over the full five-year regulatory period," commented Jeremy Pelczer, Thames Water's chief executive.
Responding to Ofwat's criticisms, Thames Water's chief operating officer Jerry England suggested that it was more difficult to achieve leakage reductions in capital than elsewhere in the country.
"Missing our London leakage target is of course extremely disappointing, but tackling leakage in the capital really is a different ball game to the rest of the country… our repeated success in meeting our target outside the capital proves this," he said.
"No-one should doubt our absolute commitment to bring leakage down as fast as we can."
Despite applying for a drought order Thames Water continues to lose 894 million litres every day from its network of supply pipes.
That figure is 34 million litres over the Ofwat maximum limit, which is currently set at 860 million litres.
Ofwat have pointed out that their failure is worse than last year's and is considering appropriate "regulatory action".