Thames Water as British as the MINI

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Thames Water could face fine of up to £140 million

By Rosie Murray-West

(Filed: 22/06/2006)

 

Thames Water faces a fine of up to £140 million after

announcing a huge increase in profits yesterday while

its pipes leak almost 200 million gallons of water

every day.

 

The German-owned company, which has a hosepipe ban in

place and has now applied for a drought order, made

£346.5 million last year, an increase of 31 per cent.

 

 

Thames Water has applied for a drought order

 

Ofwat, the industry regulator, said the situation was

" unacceptable " and is preparing to take action as the

company missed its leakage reduction target for the

third successive year.

 

If Ofwat imposes the maximum penalty and seizes 10 per

cent of the company's turnover that will amount to

£140 million.

 

Customers, who may have to use standpipes if the

drought order is enforced, were angered by the

figures.

 

Dame Yve Buckland, the chairman of the Consumer

Council for Water, said the profit announcement " rubs

salt in the wounds of consumers " told to conserve

water by having showers instead of baths as well as

being banned from using hosepipes.

 

" Thames Water's leakage results are totally

unacceptable to their customers, who face restrictions

on their water use this summer, " she said.

 

An Ofwat spokesman said it was wrong that customers

were paying higher prices for water but not getting

the benefit from it.

 

The company has been given leave to increase

customers' water bills by an average of 24 per cent

between 2005 and 2010.

 

" Given its current leakage performance, we are

concerned that the company may not meet future leakage

targets or its security of supply commitments, " the

Ofwat spokesman said.

 

Thames Water lost 72 billion gallons of water last

year, enough to fill Windermere. Ofwat said its poor

performance was contributing to shortages.

 

 

Ken Livingstone, mayor of London

 

 

 

Ken Livingstone, the London mayor, said the company

should put its house in order.

 

" It is astonishing that Thames Water has failed to

meet its targets for dealing with leaks while claiming

that it needs to build an expensive and

environmentally damaging desalination plant to supply

water, " he said.

 

" Eight hundred and sixty million litres of clean,

purified water is lost through leakage under London's

streets every single day. "

 

Jeremy Pelczer, the Thames Water chief executive, said

that he appreciated there was a " confidence and

credibility concern " , over the leakages, high prices

and the profit increase. But he said he had decided to

issue the leakage figures and the profits on the same

day in a spirit of openness.

 

The company said many of the pipes in London were

Victorian and needed replacing.

 

Mr Pelczer said there had been under-investment in the

past but Thames was spending large sums tackling

leakage and had more people working on the problem.

 

Thames is the only company breaching Ofwat targets.

David Miliband, the Environment Secretary, said: " It's

a shame that good performance by most water companies

on leakage is eclipsed by the poor performance of a

few.

 

" Leakage is down by 20 per cent overall since 1997 and

most companies continue to meet their targets. These

leakage results from Thames Water are of real

concern. "

 

Thames is also under investigation for poor customer

service standards, which could result in further

fines.

 

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19 June 2006: Licence to spill: Labour MP soaks his

borders as nearby gardens turn brown

6 June 2006: Planning ministers 'in a muddle over

water shortages'

4 June 2006[Money]: CKI cools on Thames Water

2 June 2006[Money]: Profit flood as prices surge

1 June 2006[Money]: Scottish power group eyes Thames

Water

30 May 2006[Money]: Utilities pour cold water on

anti-drought national grid

29 May 2006: Wettest May in 23 years fails to halt

water bans

 

Business: Water, water everywhere

 

It's grim down South, so head North

 

 

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