Are we creating the right climate for leakage reduction?

Six water companies failed to meet their leakage reduction targets for 2009/10, Ofwat announced at the end of October. The regulator acknowledged that burst pipes from the one-in-thirty-year freeze that swept the country last winter played a significant role in the failures, but chief executive Regina Finn nevertheless warned that Ofwat now has the offenders in its sights and won't hesitate to take draconian measures if they don't get their acts together.

So the government regulator is chastising industry for taking its eye off the ball and that’s just how the system ought to work, right? True enough, but when it’s the regulator that largely determines how much companies can invest in leak reduction, it does put a rather different slant on things.
As well as policing the performance of utility companies in areas such as leak reduction and water quality, Ofwat is also charged with keeping down water bills for consumers, which begs the question of whether or not it’s striking the right balance between promoting investment and controlling costs. Bad weather and burst pipes notwithstanding, these latest results don’t bode well for future performance on leaks €” especially since funding looks set to be squeezed much more tightly over the long term.
While some leakage reduction has been factored into the AMP5 investment programme over the next five years, it looks like relatively little money will be injected after that to bring leakage down further between 2015 and 2030.  This is in stark contrast to the major programmes of the 1990s, which saw leakage drop massively from 225 litres per property per day in 1994/95 to 145 litres per property per day in 1999/2000.
Some might argue that it’s a case of “mission accomplished” with leaks approaching an acceptable level and Britain topping the global table in terms of leakage management. But with some 3,600 megalitres of water still being lost every day, there is still plenty of scope for improvement. And there’s an increasingly pressing need to do more, with the south of England’s incredibly dense population meaning that we already have less water per capita in the system in some areas than in many parts of the Med.
So it’s slapped wrists all round for Yorkshire, Southern, Northumbrian, VeoliaCentral, Dee Valley, and Cambridge, but telling them that they “must do better” won’t solve the underlying issue. Utility companies need a regulatory framework that supports investment in order to safeguard future supplies. Unfortunately, that might mean that we all end up paying a little more for our water.  

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