Thames to stop Green Recovery smart programme as costs set to be unrecoverable

Thames Water has stopped its Green Recovery programme-funded rollout of smart meters after not meeting a condition of the cost allowance related to leakage, and after failing to convince Ofwat to reconsider the condition.

Ofwat had agreed a £72m conditional allowance for Thames to install 204,700 smart meters under the Green Recovery package, in addition to those being rolled out under its main programme. The meters would support leakage, consumption and affordability objectives. The allowance was conditional on matters including the company delivering at least 98% of its leakage performance commitment between 2020-2025.

A Thames spokesperson explained: “While we met our leakage target in years one and two, the impact of drought and freeze-thaw events over the last year meant we fell short of our year three target. We asked Ofwat to review the Green Economic Recovery (GER) funding conditions in response to these challenges, but our request was declined.

“We’re disappointed in Ofwat’s decision, which we don't believe is in the best interests of our customers or the environment. South East England is a water stressed region and we need to act now to protect water resources. Smart meters are critical in helping us to reduce and identify leaks and meet the unprecedented demand for water, while giving customers greater control over their water use and bills. The additional support offered by the GER programme, would have meant we could have gone faster and further in our smart meter programme rollout. This would have accelerated benefits to customers and to the environment.

“In light of Ofwat’s decision, we have been left with no alternative but to stop the GER programme as we are unlikely to be able to recover our costs and this programme is not funded within our AMP7 determination.”

Ofwat said its conditions were set out in a July 2021 final decisions paper and that compliance with the conditions and the allowed funding would be assessed at the end of the period.

Thames added that it is committed to rolling out smart meters, pointing out that its PR24 business plan includes provision for one million more installations, to join the one million smart meters already in the ground. It will now review its plans for AMP8 meter installations to include as much of the Green Recovery scope as possible.

• Thames has appointed Tess Fayers to the role of interim operations director, Thames Valley and Home Counties, effective on 1 January 2024, after current operations director for the patch, James Bentley, elected to leave. Bentley was appointed in October 2022 following Thames’ division into the London and Thames Valley operating areas.