Leakage is reducing
February 15th 2007 Leakage in England and Wales has been reduced by 30% since its peak in 1994/95. But, despite the general success in leakage reduction, recent water restrictions in the south east of England have raised public concern about the amount of water companies are losing from the underground pipe network. Customers have been asking why they have had hosepipe bans when companies are losing thousands of litres of water
Of course, the recent bans were caused by drought, not leakage. And some of the best performers on leakage control were companies in the South East who had to impose hosepipe bans. Leakage by water companies in England and Wales fell by around 20 million litres a day in 2005-6, with most of the 22 companies meeting or performing better than the targets we set.
As part of the 2004 review of companies' price limits we published annual leakage targets to 2009-10 for all water companies in England and Wales.The companies were set leakage targets,based on the economic level of leakage (ELL). This means companies reducing leakage to the level where the cost of saving more water through fixing leaks is the same as the cost of providing water through a new supply, taking account of environmental and social costs.
The recent National Audit Report, ‘Ofwat - Meeting the Demand for Water’ found that our approach to leakage target setting is sensible and supported by 62% of customers surveyed.
However, we are not complacent. We are currently reviewing our approach to setting leakage targets to ensure that they take account of the latest understanding of environmental and social costs.
Ofwat has a duty to make sure that companies continue to supply water to customers, so leakage levels are very important to us.To eliminate leakage would be virtually impossible and enormously expensive. There are over 330,000km of distribution pipes and almost 24 million connections to the water supply network which all have the capacity to leak. The leakage targets that we set balance the needs of customers and the environment.
We are always concerned when companies fail to meet their leakage targets because it is in customers' interests that they do so and we take action where necessary.
Ofwat has a range of options to deal with leakage failures.These include more frequent reporting, detailed investigations into performance and data quality, and the use of enforcement orders.
In April 2005 Ofwat gained a new power to fine a company for poor performances.We would have used this against Thames Water in July 2006, had we not secured the legally binding undertaking in response to the company’s failure to meet its leakage targets. The company must now spend an additional £150m of shareholders money, which is more than double the maximum possible fine. Subsequent failures could lead to further enforcement action, including fines if appropriate, from this year.
Our work also involves making sure that companies plan for the future. Each company has to submit an annual report to us on their water efficiency programmes. Where we feel companies are not meeting their duties, taking account of their water resource situation, we intervene.
Ofwat is a member of the Government-led Water Saving Group, playing its part in encouraging the efficient use of water.We have developed a good practice register on water efficiency,which was launched in November 2006 on the Ofwat website, www.ofwat.gov.uk This includes examples of best practice within the industry, to encourage companies to consider adopting initiatives which have proved successful elsewhere. More articles from OFWAT: | 
