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Last Updated: Wednesday, 21 June 2006, 18:56 GMT 19:56 UK
Anger over Thames Water leakages
Tap pouring water
Thames Water is London's largest water supplier
Thames Water has come in for criticism after missing its target for cutting leaks for a third year in a row.

Regulator Ofwat said the company was contributing to water shortages and it would consider regulatory action.

But Thames Water, which announced a 31% rise in pre-tax profits to 346.5m, say the volume of water lost has reduced.

The company has enforced a hosepipe ban and is now asking for a drought order covering two million of its eight million customers in southern England.

It said it was still losing 894 million litres of water every day despite reducing leakage from its pipes.

OFWAT - HOW IT REGULATES
Has legal duty to make sure water firms comply with their licences, which set out their operating conditions
Can issue enforcement orders for firms which breach their licences
Can fine companies 10% of their turnover for breaches of licence or failure to meet standards
Can change a firm's licence
Source: Ofwat

The target set for it by the water regulator Ofwat was 860 million litres.

Thames Water chief executive Jeremy Pelczer said: "It is immensely frustrating that despite our strenuous efforts to reduce leakage we have missed our target.

"We remain committed to achieving our target over the full five-year regulatory period."

In a damning statement, the regulator said that "given its current leakage performance we are concerned that the company may not meet future leakage targets or its security of supply commitments".

'Inefficient'

Ofwat said customers were paying the higher prices Thames Water had been allowed to charge - an average increase of 24% over 2005 to 2010, excluding inflation - without getting all the benefits the company had promised to deliver.

It added: "Although the current drought is the result of below-average rainfall for two consecutive winters, we expect Thames Water to set a good example by controlling its leakage.

"The company's poor leakage performance is not only inefficient, it is also contributing to water shortages that have led Thames Water to impose a hosepipe ban and seek a drought order."

Ofwat said it would consider regulatory action after scrutinising Thames Water's report and an independent report.

It is scarcely believable that, when millions of Thames residents might face water restrictions, Thames Water continue to miss their leakage targets
Peter Ainsworth
Shadow environment secretary

The Consumer Council for Water, which represents customers in England and Wales, said Thames Water's performance was "unacceptable".

London Mayor Ken Livingstone said there would be no need to build a proposed new desalination plant for London if Thames Water fixed its leaking pipes.

Although the news was of "real concern", according to Environment Secretary David Miliband, it should not mask the fact that leakages across the industry were down 20% since 1997.

His opposite number, shadow environment secretary Peter Ainsworth, said: "It is scarcely believable that, when millions of Thames residents might face water restrictions, Thames Water continue to miss their leakage targets.

"It makes the task of asking the public to use water responsibly much harder."




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See some of the leaks in the Thames Water area



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