Following on from a post I did earlier this week about Ofwat and Thames Water, the water regulator has in my opinion come up with a much better solution than fining them – especially as everyone guessed the fine would be a paltry £10 million.
What they have in fact done is come to a legally binding agreement with Thames Water whereby the water company will spend an additional £150 million by March 2010 on meeting leakage targets.
Now this isn’t perfect I know, but it’s better than the alternatives and should be better for the customer. Obviously it’s better than a £10 million fine. In my opinion it’s also better than a £140 million fine that goes to the Treasury. At least the money is being ploughed back into the system it was earned from rather than going to the shareholders.
The only way I can see Thames Water may have got off lightly with this is how do we know this money spent is in addition to any money that was going to be spent on meeting targets anyway. I suspect Ofwat will have an answer to that. And of course a £150 million penalty over nearly 4 years is different to an immediate fine.
Read the press release by Ofwat. There are some interesting figures in that page. Seems a fine of £140 million wasn’t on the cards anyway.
So what do you think? Leave your comments here.