Ofwat, the economic regulator of the water and sewerage sector, has reported that although the water companies continue to deliver good levels of service to most consumers, last year six companies failed to meet their leakage targets.

Ofwat's latest Service and Delivery report scrutinises how the companies performed in delivering services to customers in England and Wales in 2009-10. It showed that:

complaints have fallen to their lowest level for four years;
drinking water quality remains up there with the best in Europe; and
all companies achieved their targets to make sure they have appropriate supply levels to meet customers' needs.
The regulator said that in general,  companies continue to deliver safe, reliable supplies, yet there are still areas for concern, including performance on managing leakage. Six out of 21 companies failed to meet their leakage target in 2009-10.

The companies that failed were:
Cambridge (1.4% over its target)
Dee Valley (2%)
Northumbrian (Essex and Suffolk 1.5%, North East 3.3%)
Southern (3.3%)
Veolia Central (3.6%)
Yorkshire (7.3%)
The leakage failures occurred in the context of the coldest winter for over 30 years. Cold weather can make tackling leakage harder. Snow covered ground can make identifying leaks more difficult, and all companies reported high numbers of burst pipes because of ground movement caused by freezes and thaws.
Regina Finn, Ofwat's Chief Executive Officer said:

"People can shop around for the best deal on many things, but not water. We are here to make sure customers get a fair deal. Services are generally improving, but there are still areas for concern.

"We take any leakage failures seriously. Most companies stepped up to the challenge of tackling leakage during a particularly harsh winter. Those who haven't, we have put on-notice.

"If companies continue to underperform, we will take action. In the last five years, companies have had to pay out more than £500m, from their own pockets, following underperformance. We've made sure that the bulk of this money has been spent on giving something back to customers - either through reduced bills or investment in improving services.

"That's why when certain companies consistently failed to manage leakage, we made sure they invested an extra £195 million of shareholders' money putting the problem right.

"Although last year's leakage failures did not put customers' supplies at risk, future challenges such as climate change and population growth mean that valuing this precious resource is more important than ever before."Ofwat has put in place monitoring arrangements for five of the companies who failed, which will enable the regulator to take appropriate action should they fail their leakage targets in the future. Ofwat is still in the process of investigating Yorkshire Water's leakage failure, and how the company reports its leakage.Ofwat has previously taken action against companies following serious and consistent underperformance on leakage. Thames Water (in 2006) and Severn Trent (in 2007) committed a combined total of an extra £195m of their own money to address failures. Since then, both companies have significantly improved their leakage performance.Leakage levels across the sector have fallen by more than a third since its mid-nineties peak. All companies met their leakage targets in 2008-09. And between 2005-10 leakage has been reduced by more than 300 million litres a day (Ml/d) – equivalent to more than 120 Olympic swimming pools of water saved every day. Ofwat's regulatory action means that between 2005-10 companies have paid out more than £500m following underperformance. This includes:
around £75m worth of fines and a further £100m in redress for customers following enforcement action;
An extra £195m (combined) investment from Thames Water (£150m) and Severn Trent (£45m) following underperformance on leakage
returning more than £100m to customers at our 2009 price review due to underperformance by certain companies in delivering outputs, such as reductions in the number of properties at risk of sewer flooding;
A net reduction of around £75 million in allowed revenues following underperformance across a range of specific services measures, as outlined in Ofwat's overall performance assessment (OPA)