Ofwat's 'limp' attitude fails consumers, MPs say
A parliamentary committee has hit out at Ofwat for its "limp" attitude in policing water companies and failure to protect the interests of water users.
Ofwat's efforts to curb water waste were also judged inadequate. The watchdog needs to start by establishing the basic facts on consumers' water use and water efficiency, the MPs said, and use metering to bring down water use.
"Ofwat has been passive in its regulation of the water industry," said Edward Leigh MP, committee chairman. "At the same time it has paid little heed to the interests of water users" and has been "weak" in imposing sanctions on companies that under-perform, he said.
He gave the example of Thames Water which missed annual leakage targets for six years in a row and escaped without a fine (see related story) as a case in point.
Ofwat was "very slow in taking action against Thames Water for persistently failing to meet its leakage targets and decided against imposing a fine on the company, despite having the powers to do so," he said.
Last month the watchdog fined United Utilities, which provides water for North West England, £8.5m for repeatedly trying to overcharge customers. The fine is unlikely to influence behavious as it represents 0.7% of the company's annual profits, critics said.
Ofwat needs to get serious about water efficiency but "does not even have trustworthy information on leakage and consumption," MPs said.
The watchdog responded by saying it "protects consumers by keeping prices down, driving improved service and where companies fail to deliver taking effective action."
It pointed out that although it got away without a fine, Thames Water was ordered to spend an extra £150m on replacing London's leaky pipes - equivalent to more than twice the maximum fine the watchdog could have imposed.
"Without Ofwat's work, the average water bill would be £90 per annum higher today than it is," a spokesman said.
Britain is not known for low water prices, however - a study of the UK's water industry recently found that exceptionally high profits afford water companies the luxury of not investing in long-term water and energy efficiency projects (see related story).
The full PAC report can be accessed here.
© Faversham House Group Ltd 2007. edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.