WATER REGULATOR Ofwat last week held back from fining Thames Water and United Utilities for missing their leak reduction targets for 2004/2005.
But it warned that it was watching their performance closely and could levy fines in future.
Thames and United Utilities were the only two of the 10 major water companies to have missed leak reduction targets.
'I now have the powers to fine a failing water company - I should not hesitate to use these powers if I thought that a company was not complying with its duties, ' said Ofwat director general Philip Fletcher.
But Fletcher said he did not believe that the companies' performances this year were poor enough to deserve any fines.
'I don't believe that the actions of any company warrant the use of these fines. Thames Water is making progress. We aren't just going to trust them on that; we are monitoring them closely, ' he said.
hames currently loses 915M litres of water every day, the equivalent to 366 Olympic swimming pools. Its target was 905M litres a day.
Although we narrowly missed our leakage target we are pleased that our leakage rate has fallen year on year for the fi rst time in five years. Reducing it further is a major priority, ' said a spokeswoman.
United Utilities was expected to reduce leaks to 470Ml/day but only managed to cut it to 500Ml/day - or 200 Olympic swimming pools. This was the third year running that it missed its target.
oth companies blamed ageing Victorian infrastructure for high leakage rates. Thames claimed that extreme freeze and thaw effects in 2000 displaced the London clay and badly damaged its infrastructure.