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Thames Water hit by £8.55M penalty over leakages

Thames water pipe diversion

Thames Water has been isued with a penalty of £8.55M after failing to hit its leakage targets, marking the second large financial penalty it has received this year.

In its annual report Thames Water admitted it had failed to reduce leakages for 2016/17, leading water regulator Ofwat to brand the failure “unacceptable” and impose the maximum penalty of £8.55M, to be passed on to customers in the form of lower bills from 2020.

In March Thames Water received a £20M fine for discharging poorly treated sewage into rivers between 2012 and 2014, causing several serious pollution incidents which killed wildlife.

“We’re working hard to get back on track after hitting our leakage targets for 10 years in succession, and reducing leakage by a third from its peak in 2004,” said a spokesperson for Thames Water.

“The reasons for missing it are complex, and the evidence is being examined carefully, in order to learn as much as we can. But the fact that the target was missed despite significant additional expenditure clearly points to the need to improve both our planning and delivery.”

The utility firm said it had missed its target by 47M litres per day, despite spending an extra £16M, 26% more than budgeted. Ofwat has opened an investigation into whether further action should be taken in conjunction with the penalty.

Thames Water reported that its pre-tax profit fell to £71.1M from £511.2M in 2015/16, with the majority of the loss attributable to an increase in financial expenses. However, revenue increased by £33M due to its work on Tideway with Bazalgette Tunnel Limited.

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