The changes follow a public consultation into the recent takeover of Thames Water Utilities Limited (Thames Water) by Kemble Water Limited (Kemble).

Regina Finn, Ofwat Chief Executive, said:

"It is important that under its new ownership Thames Water concentrates on improving its performance, delivering for its customers and meeting its regulatory obligations. We see no reason why Thames Water cannot achieve this, and we will be looking to the company to demonstrate its commitment to its customers by, amongst other things, meeting its leakage target this year."

In the public consultation Ofwat raised concerns about the proposed board structure for Thames Water, including lack of executive representation. Respondents echoed these concerns.

To address these concerns, Kemble has appointed three executive officers to the board of Thames Water to replace three of the existing shareholder-appointed non-executive directors. Kemble will also conduct an effectiveness review of the board governance arrangements within the next six to 12 months, in line with the guidelines laid out in the Combined Code on Corporate Governance.

Ofwat will look carefully at the outcome of that review to be assured that the new board structure works in the interests of customers as well as shareholders.

Ofwat will make changes to Thames Water's conditions of appointment (licence) to reflect the new ownership. This will ensure that the regulated water and sewerage company is effectively ring-fenced from the rest of the Kemble group and customers' interests are protected.

Kemble proposes to implement a revised financial structure for Thames Water later this year. Ofwat will publish its views on the proposed change once it, and the rating agencies, have completed their respective reviews.