Customers, Strategy & management

Water company under fire for failing to meet target

Thames Water’s chief executive, Steve Robertson, has admitted the company must “work smarter” on reducing leakage.

His comments follow the publication of Thames’s annual report today, in which the company confirmed it has missed its 2016/17 leakage reduction target by 47 million litres a day.

The failure earned the company a maximum penalty of £8.6m from Ofwat and a stinging rebuke from the regulator’s chief executive Cathryn Ross

“The failure by Thames Water to meet the leakage commitments it has made to its customers is unacceptable,” said Ross.

“We take very seriously our responsibility to ensure that every water company is delivering for its customers and where they fall short, we do not hesitate to step in to protect customers’ interests.”

Ross’s ire was echoed at the Consumer Council for Water, whose chair for London and South East, Sir Tony Redmond said: “Thames Water’s failure to meet its leakage target sends completely the wrong message to its customers at a time when households are being encouraged to use water more wisely.”

He added: “We have repeatedly called on water companies to show more ambition in reducing leakage, which is an issue that really matters to consumers.”

Robertson told Utility Week that Thames has “very much taken to heart” the penalty incurred by Ofwat.

“We spent more money and worked harder last year to attack leakage than probably we have ever done and the fact that we didn’t get there – the learning point is that we need to be smarter,” he commented.

Achieving this will require better identification and targeting of leakage, said the chief executive. He explained that this will come through the more extensive use of new technologies, like drones and satellite data, as well as improved processes.

Robertson also identified that customer-side leakage is a major area of opportunity for Thames as it looks to improve its performance.

Around 30 per cent of all the company’s leakage occurs on the customer-side of it network, including inside customer homes.

To tackle this, Robertson said Thames will need to review the way it engages with customers on leakage.

“The historical policies we have had around customer-side leakage have not necessarily been bad policies, but we’re am not convinced we’ve necessarily been executing them as well as we could of,” he said.

Another key area to address in order to reduce customer impact from leakage is “visible leaks” said Robertson.

While these leaks – which include burst water mains – do not account for a high volume of Thames’s overall leakage level, Robertson acknowledged that they are a “nuisance” to customers and have a significant reputational impact.

One such visible leak occurred on Christmas Day last year, and left Thousands of London customers without water, attracting criticism from the city’s mayor Sadiq Khan.

Robertson revealed that the cause of that incident has now been formally identified and a full report will be published shortly.

“That incident was all about an issue with our pumps,” he explained. “The issue was a electronic one, where the redundancy failed in the device that controlled the pumps.”

Roberston expressed optimism that Thames will address its underperformance on leakage, though he admitted the company will have to work “very very hard” to do so.

He also cautioned that “When you get a miss like this it’s very unusual that you turn on a sixpence and then get back on target.”

Recovery will be a drawn-out process and “in the meantime I would not be surprised if we have another miss next year.”

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