Our leakage performance

Update for October 2020

The launch of new digital tools

The increasing use of technology, data and insight is critical to our long-term plans, as we become smarter in our approach to network maintenance and repair to reduce leakage. And we’ve just launched two apps to make leak detection easier for our crews - the first identifies the water supply zones which are most likely to have leaks and the second helps us to locate the leaks in those zones more efficiently. The second app brings together existing data about pipe risk and condition with new data from the 27,000 acoustic loggers which are installed across our network and ‘listen’ for leaking water. The tool gives our technicians a clear and simple view of leakage information including an up-to-date map of our network, which is colour-coded to show the highest-risk pipes and pipe repair history.

Our action on leakage

We delivered a 95 Ml/d reduction in annual reported leakage during 2019/20 (using AMP 6 2015 – 2020 regulatory period methodology) – leading to our best performance in 30 years – and we’re continuing our focus on leakage reduction as we move through this regulatory period.

Social distancing as a result of the Covid-19 pandemic continues to have an impact on our leakage activity and daily operations and our leakage level for August was 17 Ml/d above our mid-range forecast at 544 Ml/d. Despite the challenges, we still expect to achieve our target this year and remain on track with our 20% reduction in leakage between 2019/20 and 2024/25. We’ve updated our leakage calculation to be in line with new industry-wide reporting requirements to improve transparency and benchmarking between companies.

Read about our detailed August 2020 performance and see our 2019/20 monthly and annual average leakage levels at a glance.

Our ambitious leakage reduction plan focuses predominantly on innovation, increased productivity and data-driven decision making. See below for further information about risks.

Productivity and impact of Covid-19

Fixing leaks is one of the key activities we undertake to reduce leakage. Because fixing non-visible leaks has the biggest impact on reducing leakage, we prioritise them whenever we can - 98% of our leakage comes from hidden leaks.

In 2019/20, we fixed an average of 1,400 leaks every week. Restricted access to homes and social distancing guidance for the safety of our teams and customers, due to the impact of Covid-19, has led to a reduction in the number of leaks we’ve been able to fix in recent months - in August 2020 we fixed an average of 1,192 leaks each week. This is slightly down on last month for several reasons, including the availability of leakage repair teams due to summer annual leave and self-isolation relating to Covid-19. We’ve also seen a rise in typical water demand for August due to the summer weather combined with many people staying at home for their holidays – this makes it a little more challenging to detect leaks which mirror the effect of increased demand.

Of the total number of leaks we fix, a quarter are at our customers’ properties. While these are private leaks, not on our network, we continue to work with our customers where possible to repair them – and in some cases we can do this free of charge.

In the early months of the pandemic, we scaled down our efforts to find private leaks at our customers’ properties, primarily due to social distancing guidance. To carry out this work, our engineers often need to access customers’ properties, to find out whether the leak is on the property’s internal or external pipework, and therefore potentially come into contact with members of a household. Due to the government restrictions and the health and safety of our customers and employees being our priority, we suspended this activity, except in cases where it was essential.

With the recent easing of restrictions, we’ve now restarted work in this area while taking the necessary precautionary measures. Aided by more people being at home, the process to make appointments with customers has been easier. However, due to the suspension of this activity over the first couple of months of this year, it is unlikely we will be able to fully recover the shortfall in repair numbers this year. We intend to carry out more leakage activity in other areas.

Many of the repairs to our pipes are on public roads and pavements. Given the current restrictions and guidance, we’re taking extra precautions when doing this work to ensure social distancing and protect both our key workers and members of the public, and this takes extra time.

The pandemic has also had an impact on our ability to measure leakage. Due to the unprecedented nature and scale of the restrictions, we’ve seen a large reduction in water use over the night-time period, which is what we use to calculate leakage. This is predominantly due to industries either suspending or scaling down their operations. To correct for this, we’ve adjusted our night usage estimates to improve the accuracy of our leakage level calculation. We continue to monitor this very carefully to ensure the night usage estimates are as accurate as possible, however it’s a complicated task given the ever-changing restrictions we all face. As a result, we’ve applied a careful but conservative approach to calculating our leakage position. Once we are fully able to assess the impact of the restrictions on demand, we will have a more accurate view.

Due to the significant impact of the Covid-19 restrictions and the effects they have had on our ability to deliver the levels of leakage reduction activity in our original 2020-21 plan, we’ve put together a revised plan. It outlines scaled down activity for the first quarter of this year – most notably relating to a lower number of repairs to private leaks at our customers’ properties.

Innovation and data-driven decision making

As most leaks hidden underground never become visible on the surface, our first challenge is to find them. And to help us make good decisions on resources and leakage reduction initiatives, it’s important we have the most accurate data possible.

As we work to reduce leakage even further, below our lowest level for 30 years, we must be increasingly innovative in how we do this, and we’ve been improving the way we use data to drive decision making by:

• Rolling out smart water meters – When a smart meter has been installed and is transmitting data, we’re able to identify if there’s a leak through the recording of continual usage. We’re now using data from over 400,000 smart meters that are consistently providing us with better information about water use at all types of properties. Using data in ways like this has helped to prevent over 6 Ml/d of leakage since the start of April 2020.
• Installing acoustic loggers – Acoustic loggers listen for the noise water makes as it leaks from pipes. They help us to improve the efficiency of leak detection. We’ve installed approximately 27,000 loggers and are repairing the leaks located as a result of the information the loggers are generating. Loggers have helped us detect over 24 Ml/d of leakage since the start of April 2020.
• More leak detection technicians – We’ve increased the number of leak detection technicians working for us, and we introduced a programme of field audits to validate their work. They use data to judge where leaks are occurring and tell repair teams where to dig.
• ‘Fingerprinting’ our water zones – We’re using key data about each of our water zones to begin to create unique fingerprints for each of them. That in turn will help us to understand the drivers of leakage performance and burst mains through various analysis methods.
• Temperature analysis – Working with a number of other water companies, we’re in the early stages of developing an innovative leak detection method that aims to use temperature data to pinpoint areas with larger leaks that are difficult to detect.
• Leak analysis – We’re starting to look at how soil conditions can cause visible leaks, so that we can build up a better understanding of the environmental conditions that lead to leaks.
• Technology - such as in-pipe cameras to help locate difficult leaks.

We’ve also developed two digital data-driven tools as highlighted in the introduction, which automate the analysis of multiple dynamic data sources, using algorithms and models to support our leakage analysts and technicians and increase the efficiency of leak detection.

To help make our repair processes even more efficient, we’ve brought in new ways of working and have also created a data-driven performance management tool to help supervisors get the most from their repair teams. This involves a formal daily meeting structure between supervisors and scheduling teams, a standardised process and clarified responsibilities, as well as a bespoke ‘performance dashboard’ for supervisors that brings together key information about performance. Together with improvements to planning and scheduling of work, this enhanced performance management regime is expected to deliver an efficiency improvement in ongoing leak repairs.

In addition to increasing leak repairs and using data more effectively we’re also undertaking other activities to generate a sustainable reduction in leakage such as:

• Pressure management - We manage the water pressure within parts of our network to reduce the likelihood of pipes bursting. This also reduces the amount of water lost through existing leaks.
• Accounting for all water used - We're continually trying to improve our estimate of water used from our network. This activity focuses on stopping illegal use (for example unlicensed standpipes and illegal connections), replacing faulty customer meters, and ensuring all properties are registered on our billing system correctly.

A better understanding of our leakage

Our leakage figures are affected by more than the amount of water that leaks from our pipes.

A key part of updating our leakage data is refining the assumptions we make about water use by unmetered households, which is affected by factors such as population growth and housing developments. We made these updates on an annual basis in the past but have now moved to six-month updates and we’ll look to increase this frequency even further.

As part of this change, we’ve also taken a ‘big data’ approach to our analysis and brought in new data to cross-reference against the information we already hold. This includes using the data from our smart meters to better understand the overall trends in our customers’ water use. We can then use that to inform our assumptions about water use by unmetered households. This is possible because smart meters give us 24 readings every day, compared to the one or two readings per year we would have received for the same customers before their smart meters were installed.

Updating our data in this way is important as it will help us improve our leakage reduction capability and delivery. Having better data on where leakage is happening allows us to concentrate our detection and repair efforts on the parts of our network where we can reduce leakage the most.

The work we carried out in 2019/20 to understand the demand for water at night by our unmetered household customers identified that we had underestimated the amount being used. This includes both consumption and leakage from pipes, including dripping taps inside homes. Our analysis used data obtained from our smart meters installed across London and resulted in a reduction in leakage of 24 Ml/d.

We also saw a reduction in leakage of 6 Ml/d compared to our 2018/2019 annual report through the standard update to our water balance, which includes taking account of things such as increasing population and property numbers, and that are only updated at the end of the year. The adjustment was applied to our 2019/20 reported leakage figure (annual report for 2019/2020) following an in-depth review by our external auditor.

Leakage reporting changes for 2020 to 2025

A new leakage reporting methodology is being rolled out across the industry by our economic regulator, Ofwat, to better align reporting to improve transparency and benchmarking across the industry. In addition, leakage targets will also be moving from an annual target to a three-year rolling average target for all companies.

The main changes made to water companies’ methodologies are outlined below:

• The hour during the night used as the starting point for the leakage calculation is now fixed (03:00 to 04:00) and aligns with the period used to calculate allowances for night use. Previously we used the lowest hour between 00:00 and 06:00.
• There have to be three valid nights of data within a reporting week to calculate leakage compared to one night under the previous method.
• The period of time during which data is unavailable now has to be infilled using trend analysis rather than using the last valid value.
• Improvements to the methods used to calculate consumption, that were not previously able to be included to maintain consistency in approach with the method of target setting, have now been included in both our targets and reported leakage levels.

To enable this new approach, we’ve developed a new tool to implement the new reporting processes needed to ensure compliance with the agreed methodology and allow employees across the company to view our latest reported leakage.

All water companies must conform to the new leakage reporting methodology by the end of 2020/21. However, we have now switched our leakage reporting over to the new methodology to ensure that we are fully aligned across the company. This means we are very clear in knowing exactly where we are in terms of leakage level, and the levels of activity we must deliver to achieve our plan. It was important for us to get into this position as early as possible in the year, setting up solid foundations to further drive down leakage.

We moved to this reporting method in the August report following the completion of data consistency and reliability checks on our new reporting tool.

Leakage reduction - at a glance

Monthly leakage 2020/21

Year-to-date average leakage 2020/21

Notes:

1. The figures in the above tables are operational leakage data and therefore based on information from Thames Water source systems at a point in time. This data may be subject to a data refresh on a monthly basis and for year-end reporting.

2. The figures have been updated to be consistent with the Ofwat AMP7 leakage reporting methodology.

Conclusion of Ofwat investigation

Ofwat investigated our leakage performance in 2017. In August 2018, we agreed a package of financial and non-financial commitments with our economic regulator Ofwat under Section 19 of the Water Industry Act 1991. We refer to these as our Section 19 Undertakings.

As part of our Section 19 Undertakings we agreed to pay £120 million back to our customers. This money comes solely from Thames Water’s shareholders and is reflected in customer bills. In order to clarify and improve how we report leakage we appointed Victoria Borwick, former Deputy Mayor of London and former MP, as an independent monitor of our monthly leakage reporting. Victoria brings highly relevant experience of reporting and communicating complex matters to the public. We’re working with Victoria to provide external and independent feedback and challenge to how we engage with and improve customer understanding of our leakage targets and performance against these.

Tonia Lewis continues to fulfil the role of Undertakings Compliance Officer. This role is responsible for ensuring overall compliance with the Undertakings and providing regular updates to our Board and Ofwat. We provided our fourth 6-monthly review of our compliance against our Undertakings to Ofwat on 30 April 2020 and we met with Ofwat on 19 August to discuss the report, provide details about our leakage plans for 2020/21 and details of our customer engagement in respect of leakage.

Risks to our plan

The two largest risks to us meeting our target in 2020/21 are the impact of the on-going Covid-19 pandemic and unpredictable weather.

The impact of current restrictions has meant our leakage activity performance is behind our original plan. We're continuing to closely monitor official guidance and review our plans quarterly so that we can adapt as official guidance changes.

Typically, the weather is the largest risk to our leakage level each year, as both extreme cold and hot conditions can increase leakage levels. To mitigate this risk, we continually review and update our leakage reduction plans against a range of short and long-term weather scenarios. We formally review our plans every three months to assess performance and identify areas where we need to undertake additional activity. This work enables us to review the resource requirements and ensure they are enough to detect and repair the number of leaks required.

Other material risks that we monitor are the effectiveness of our leak measurement models, our understanding of how our pipes react to rapid changes in weather, and our ability to pre-empt network deterioration. Our Leakage Task Force is addressing these and other questions to ensure our planning assumptions and leakage reduction strategy are effective.

To ensure effective control of the above risks, we’ve assigned senior managers to drive performance in key areas we know are challenging, such as leakage detection and repair output performance, data capture, analysis of leaks fixed and job auditing.

Get involved

You too can play an important part in helping us achieve our targets.

• If you spot a leak, let us know using our new and improved ‘Report a problem’ page.
• Read our guide on fixing a leak at your property.
• Find out how you can help save water by being 'water smart'.

Feedback: We’d like your feedback on our leakage performance information. Please get in touch to share your feedback, or to discuss how we may be able to make this report more accessible for you.

Helpful links

• Learn about our metering programme
• Jargon buster
• Glossary of Terms used in this report

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The information provided is, to the best of our knowledge, accurate, but may be subject to change from time to time. The information does not represent formal annual regulatory reporting.