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A new index is helping Ofwat to keep a close eye on water companies' ...
A new index is helping Ofwat to keep a close eye on water companies'

actions to safeguard the reliability of supplies.

Water companies must plan to meet customers' demands even during dry

years, although there is no guarantee of unrestricted supplies if

there were to be a serious drought.

The Security of Supply Indexpublished shows that there is no

room for complacency and highlights areas where more work needs to be

done by some water companies to ensure the continuing reliability of

future supplies. Ofwat also reports that most water companies have

made progress in cutting back on leakage from the mains.

The index is being used by Ofwat to monitor how companies manage the

risk of water supply restrictions in future dry spells. The index

puts particular emphasis on 'headroom' - the difference between the

amount of water each company has available, and how much it must put

through its mains network to meet customer demand. The report

includes for the first time information on critical summer peak

demand when supply systems are under the greatest stress.

The report reveals that 17 of the 23 companies in England and Wales

meet their targets for security of water supplies. Ofwat cautions

that this should not be taken as a guarantee that there will not be

restrictions in these areas in unusually long dry periods, such as we

are currently experiencing. Some companies do need to do more work to

improve the position and manage risks down to an acceptable level,

and Ofwat will be monitoring progress with their plans annually.

Much of the success in avoiding restrictions has been due to the huge

reduction in water lost by leakage from the mains. Although leakage

rose slightly last year, it has been cut by more than 25%

over the last seven years. This is saving around 1.3bn litres

of wate r every day, enough to meet the daily needs of nearly 10

million households. Most companies are now operating at their

economic level of leakage.

Regrettably, leakage rose in 2002/03 at two companies - Severn Trent

and Thames Water. At the former, most of the rise has been attributed

by the company to changes to the way data is collected and

interpreted. This is now the subject of an independent investigation

being jointly carried out for Severn Trent and Ofwat.

At Thames Water, which supplies more than 11 million people in

Greater London and surrounding areas, Ofwat has imposed stringent

targets to ensure leakages are rapidly reduced over the next three

years. Reports show that the company is now making progress in

achieving this in most areas, with the exception of north London.

Bill Emery, Ofwat's director of costs and performance said: 'Customers value reliable supplies very highly. By using the securityof supply index we can keep close tabs on how companies plan to meet

customers' needs. While there were no restrictions on supplies this

summer, there is no room for complacency, and the index points up

areas where more needs to be done to ensure reliable supplies in the



1. The director general of water services is the economic regulator

of the water and sewerage companies in England and Wales. He

exercises his powers in a way that he judges will allow them to carry

out their functions properly, and finance them. Customers' interests

are represented by WaterVoice.

2. All companies already have contingency plans for limited

restrictions which might have to be introduced in exceptional

climatic circumstances, probably less than once every decade.

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