Around 3.5 million households in London and Thames Valley will receive a share of £120m in compensation, via a rebate in bills.

It comes after an investigation by Ofwat revealed the board ‘did not have sufficient oversight and control of the company’s leakage performance’.

Customers are set to receive a rebate of approximately £15 each over the next couple of years, broken down as follows:

• £65m payment to customers, including £12m more for 2018/19 leakage underperformance, £46m in compensation for this underperformance, and £7m for management failures.
• This is on top of £55m in automatic penalties incurred by the company for missing its commitment to households to cut leaks between 2016/17 and 2018/19.

This money would usually be refunded to Thames Water customers over the next price review period (from 2020 onwards), but Ofwat has brought these penalties forward so customers will see reductions before then. This includes:

• A rebate of approximately £6.50 in 2019/20
• A rebate of approximately £8.50 in 2020/21
• Bill reductions of approximately £2 between 2020-2025.

Further, Thames Water will publish its performance each month in tackling leaks and make additional leakage reductions of 15% by 2025.

The sums will be borne by Thames Water shareholders.

‘Unnecessary strain on the environment’

Ofwat chief executive, Rachel Fletcher, said: “Thames Water failed its customers in tackling leakage and the measures we’ve announced illustrate the scale of the company’s shortcomings and how seriously we take them.

“High leakage creates unnecessary strain on the environment, excess costs for customers and increased risk of water shortages. A well-run water company will have a good understanding of the condition of its pipes and will be able to reduce leakage over time.

“Thames Water has assured us that they now have a grip on the leakage situation, but this should serve as a catalyst for the company to improve how it delivers on its wider commitments to customers.”

‘Performance not good enough’

Steve Robertson, Thames Water CEO, said: “Reducing leakage is really important to us and to our customers. We met our leakage targets for a decade but our recent performance has not been good enough. We let our customers down and for that we’re sorry.

“We have taken more control of how we manage the network and are investing significantly more in people and resources to tackle leakage, get back on track and then go beyond. Thanks to these changes already in place, our current leakage repair performance is our best ever at around 1,000 a week. Our focus is to restore customers’ trust and confidence in Thames Water.”