As Thames Water published its draft Water Resources Management Plan last week (see HERE) Ofwat provided an update on its June investigation into whether the company had contravened any of its statutory obligations following its failure to meet its commitment to reduce leakage in 2016-2017. The regulator has already issued an automatic £8.55m penalty.
Ofwat said the investigation remains ongoing, but clarified exactly which elements of Thames’ instrument of appointment it is targeting:
Section 37 of the Water Industry Act 1991, which is a water company’s general duty to develop and maintain an efficient and economical system of water supply within its area and to ensure that all such arrangements have been made, a) for providing supplies of water to premises in its area of appointment and making them available on demand, and b) for maintaining, improving and extending its water mains and other pipes as are necessary to meet its obligations under Part III of the Water Industry Act 1991.
Condition F of its instrument of appointment, which concerns the financial and management resources and systems of planning and control the company has to fulfil its statutory obligations.
Condition M of its instrument of appointment, which concerns the provision of information that Ofwat may reasonably require to carry out its functions.
Should enforcement action be taken, at the top end Ofwat is able to impose a financial penalty of up to 10% of the regulated company’s annual turnover.