Thames Water must make an urgent “step change in the way it operates and behaves,” according to Ofwat chairman Jonson Cox, who has set out a challenging five-point plan for reform of the UK’s largest water company, writing exclusively in Utility Week.
In an unprecedented move by a sitting regulator, Cox has commented publicly on the row surrounding Thames’ finances and service performance. He has called on Thames to make five commitments, including an immediate review of the board’s composition and action on executive pay.
Other commitments cover customer communication; an annual, audited statement from the board; and transparency and clarity around financial returns for investors.
Setting out his requirements of Thames, Cox writes: “I call on the company to adopt these five commitments quickly, and discuss with us how it will meet them. We may ask the same of others in the industry too, as we evolve our ground-breaking approach to reforming Board leadership in public service providers.”
Thames Water came under fire last week following the publication of its annual report. The document confirmed a £100m dividend payment for shareholders at the same time as revealing the company missed its 2016/17 leakage reduction target by 47 million litres a day.
Ofwat announced it will conduct an investigation into the company’s performance on leakage in addition to issuing a “maximum penalty” of £8.6m.
In his Utility Week column, Cox reiterated that the regulator will be “thorough” in pursuing this investigation. He added that its outcome will be “transparent” and “if appropriate, it could bring sanctions beyond the penalties which flow automatically from our performance regime.”