Our leakage performance

Monthly leakage 2020/21

Year-to-date average leakage 2020/21

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.

3. The forecast leakage levels above are based on our internal targets which would outperform our performance commitment.

Our leakage level

The graph below shows the estimated amount of water lost from our network in February 2021, compared with the upper and lower forecasts in our leakage reduction plan. Our leakage level was 732 Ml/d, which is 94 Ml/d above the mid-range forecast in our internal plan for February of 638 Ml/d.

Leakage is always expected to go up during winter months when colder weather causes pipes to contract, increasing the chance of bursts. We take this into account and plan to fix more pipes during the colder months. We also review our plans quarterly to address the impact of external factors such as unusual weather.

However, the weather in both January and February this year was even colder than expected, with water temperatures estimated to have been 1^oC below average. This, together with the ‘freeze-thaw’ event in mid-February, led to an increase in visible leaks, and repairs to these leaks on our large pipes were 65% above expected levels. We redirected resources to prioritise the fixing of these leaks, due to their impact on supplies and the safety implications in cold weather when the surface water can freeze. These leaks on mains also take longer to repair.

This had a knock-on impact on our planned ‘find and fix’ work, to repair hidden leaks, and our leakage performance was not where we expected it to be at the end of February. Without this impact we estimate leakage would have been in line with our forecast levels.

In addition, ongoing Covid-19 restrictions throughout the year have continued to have an impact on our ability to fix as many leaks as we planned. With regular reforecasts and evolving guidelines, we’ve made improvements in recent months, however we’re still not back on track with planned levels.

Our internal leakage target was more ambitious than our performance commitment and we remained on track to achieve our performance commitment up to December 2020. However, the impact of Covid-19 has been compounded by the unusually cold weather during January and February. This has made meeting our year-end target more challenging.

We’ve been putting every effort into meeting our performance commitment and have set up a new Leakage Task Force to oversee the delivery of our revised and ambitious leak repair plans for March, to get us back on track. We will not fully know our end of year position until we have completed our annual reporting.

We remain committed to deliver our 20% reduction for the current five-year regulatory period.

The number of leaks we fixed

As part of our repair programme, we fix three different types of leak. On average:

• About 50% are non-visible leaks - these are below the surface and aren’t easy to find, but fixing them has the biggest impact on reducing leakage.
• About 25% are visible leaks - these are easier to see, for example on pavements or roads. We forecast the number we expect to repair based on an average year.
• About 25% are customer leaks - these are within the boundary of a customer’s property up to the point where the pipe enters their home/building.

We fixed 4,568 leaks in February 2021. This was a 4 % increase on January, but 10% below planned levels for the month. This was due to fewer non-visible leak repairs, as we diverted resources to tackle the increase in visible bursts on mains due to the cold weather. These leaks on mains take longer to repair, so we weren’t able to fix as many leaks as we’d planned. In February:

• Non-visible leak repairs were 33% below target
• Visible leak repairs were 25% above forecast
• Customer property leak repairs were 9% above target.

Water saved from fixing leaks

The graph below shows the estimated volume of water saved from fixing non-visible and customer leaks in February 2021, compared with our plan. We don’t include visible leaks because they’re not considered to reduce the underlying level of leakage.

We repaired leaks which we estimate have prevented leakage equivalent to almost 28 Ml/d of water in February, which was 1 Ml/d above our plan.

Despite the number of non-visible repairs falling below planned volumes (due to the increase in visible leak repairs on mains this month), the volume of prevented leakage exceeded planned levels. This was because we prioritised the largest non-visible repairs.

Covid-19 restrictions continue to negatively impact the number of customer side leak repairs we are able to do.

Our leakage reduction plan contains activities in addition to leakage repairs. This programme of work includes benefits from the roll out of smart meters (through the identification of water losses both internally and externally to a property), pressure management of the network (which reduces both the amount of water lost through leaks and the likelihood of a burst occurring) and mains replacement (targeting pipes most likely to fail). In February, the total programme of activity, including these activities, delivered leakage savings of 32 Ml/d compared to a target of 30 Ml/d.

Leakage is any treated water that a water company is unable to account for as having been used by someone. As you would expect, this includes any water that is lost from the pipe network into the ground – ‘true’ leakage. Our pipe network consists of mains (which move water around our supply area), communication pipes (which supply water to a property from the main) and other fittings, such as stop taps and valves, which allow us to control the flow of water. However, leakage also includes any water use of which a water company isn’t aware, such as illegal use and any higher-than-estimated use by households and businesses that don’t have a meter.

To estimate leakage, like all water companies, we compare the measured volume of water we put into supply against the volume we estimate is being used. The difference between these two values is what we record as leakage. We measure leakage in millions of litres per day (Ml/d).

There are many factors that affect ‘true’ leakage, but the three main ones are:

• Natural wear and tear on our network – if we were to carry out no work, other than repairs of visible leaks reported to us by our customers, we estimate leakage would increase by 322 Ml/d over the year due to the wear and tear on pipes caused by ground movement and pipe corrosion, as well as other repeated stresses.
• Seasonal changes – in typical weather conditions, the colder winter months increase leakage due to pipes shrinking, causing the joints between them to move apart. Equally, warmer temperatures can undo this effect to reduce leakage. This is expected to even out over the year but leads to peaks and troughs in leakage levels.
• Extreme weather events – can impact leakage over and above the typical seasonal rise and fall. A freeze followed by a rapid thaw can over-stress pipes causing them to burst. Similarly, prolonged hot dry periods can shrink the earth that supports pipes, causing them to move and break.

We calculate our estimation of the volume of water saved from fixing non-visible and customer leaks. We don’t include visible leaks because they don’t reduce the underlying level of leakage.

Leakage reduction is one of our top priorities. Our aim is to reduce our reported leakage by 20% between 2020 and 2025. To get there, our ambitious leakage reduction plan focuses on a mix of innovation, increased productivity and data-driven decision making.

We are an active member of UKWIR (UK Water Industry Research) which shapes the water industry’s research agenda and has set an aspirational target of zero leakage by 2050. Our Research, Development and Innovation programme has four research areas that map the UKWIR's themes into our priorities for tackling leakage:

• Prevent: Understand the impact we have on our own network and minimise actions that cause deterioration. For example, understanding the effect that changes in pressure (e.g. as a result of changing pumping to supply demand), has on the network – both in terms of bursts and leakage.
• Aware: Identify what is, and isn’t, leakage. For example, distinguishing leakage from usage, better identifying areas that would benefit from investment, using ‘machine learning’ on historic leakage and repair records to decide which leak detection techniques to use to locate the biggest leaks.
• Locate: Understanding the future of leak detection technologies and how these can be improved. For example, using our acoustic loggers to identify the occurrence, location and size of a leak. This helps to create a better understanding of which leak detection techniques should be used in a situation and/or area.
• Mend: This is looking at what the future of repair technologies may look like. For example, minimising the environmental impact by reducing the size of the hole we dig when we repair a leak. Could it be possible to undertake repairs on our network without digging a hole (‘No Dig’ techniques)? How can we minimise the cost and time taken to make a repair, thereby reducing the impact on our customers?

Innovation and data-driven decision making

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

We’ve been improving the way we use data to drive decision making and reduce our leakage 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 19 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 and therefore, help us to improve the efficiency of leak detection. We’ve installed approximately 27,000 loggers and are repairing the leaks as a result of the information the loggers are generating. Loggers have helped us detect over 61 Ml/d of leakage since the start of April 2020.
• ‘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 understand the drivers of leakage performance and burst mains through various analysis methods.
• Pipe Testing Rig – We are building a test rig that will allow us to investigate the performance of water pipes and fittings in a live, pressurised, environment at our Kempton Water Treatment Works. We will be able to simulate the impact of pressure fluctuations, temperature variations and operating conditions on a wide range of pipes up to 36” in diameter, allowing us to better understand the impact of material and age on performance.

We’ve also developed two digital data-driven tools, 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.

Using data to get 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’ve 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.

We’ve also taken a ‘big data’ approach to our leakage analysis and brought in new data to cross-reference against the information we already hold – e.g. using the data from our smart meters to better understand the overall trends in our customers’ water use. 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.

The pandemic has had an impact on our ability to measure leakage. Due to the unprecedented nature and scale of the restrictions, we’ve been seeing 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. When we can fully assess the impact of the restrictions on demand, we will have a more accurate view.

Our improved leakage performance during 2019/20 meant that our starting position for 2020/21 was ahead of our planning assumptions. Our year to date leakage level at the end of December 2020 was in line with our planning expectations, although the impact of Covid-19 meant we were behind our planned levels of activity. However, due to the ongoing Covid-19 restrictions, the knock-on impact this has on our ability to deliver our planned activity levels, and more recently the colder than average weather we have experienced, we’re now behind our original planning forecast leakage levels. We have reforecast our plans and allocated additional resources to recover as much of the shortfall in activity as possible by the end of the year.

As explained in this report in previous months, our leakage reduction values include an adjustment for the estimated volume of water saved from our non-visible and customer leak repairs. The level of this adjustment remains under continual review as we make improvements to our repair processes and the accuracy of how our leakage repair jobs are classified.

Improving the accuracy of categorisation of work we carry out, and how this is captured, is an area we’ve been working hard to improve. We believe that longer term there will be benefits for leakage targeting and our overall leakage reduction strategy to be gained from improving data quality that will then allow the application of advanced data analytics. We have several activities in place to address data improvements, such as issuing a guidance booklet to our repair teams that details the process for capturing repair activity.

In addition, we have a programme of initiatives aimed at improving the accuracy of measured and unmeasured customer water use. This includes recording usage patterns, meter accuracy and improving property/occupancy data.

We remain committed to doing all we can to reduce leakage. This is a key area of focus for our Executive Team and our Board. Our Leakage Task Force reviews our performance and reduction plans each month to ensure we retain control over the way in which our leakage reduction plan is carried out. We also maintain a dialogue about our leakage reduction plan with our key stakeholders.

The impact of Covid-19 on repair activity

Fixing leaks is one of the key activities we do to reduce leakage. Visible leaks are our highest priority and then we prioritise fixing our largest hidden leaks, where possible, as this has the biggest impact on reducing leakage - 98% of our leakage comes from hidden leaks. In 2019/20, we were fixing an average of 1,400 leaks every week.

The impact of Covid-19 significantly affected leak repairs. This was particularly evident in the first few months of the financial year, which coincided with the first national lockdown at the start of the pandemic. Performance improved significantly in October and November – during both of which we achieved a 7% month-on-month improvement in the number of repairs. On average, in excess of 1,300 leaks were repaired each week during November, trending back towards our strong performance levels of 2019-20. The reintroduction of lockdown restrictions has had an impact on recent repair numbers; however we’ve adapted to working with Covid-19 restrictions and this hasn’t had as much of an impact on our monthly performance compared to the first lockdown.

Many of the repairs to our pipes are on public roads and pavements. Given the ongoing restrictions and guidance, we take extra precautions when doing this work to ensure social distancing and to protect both our key workers and members of the public. This means it does take extra time to make repairs, and during the last year, we’ve also had repair teams self-isolating, which has had an impact on the number of leaks we’ve been able to fix.

Customer side leaks

While these are private leaks, not on our network, they contribute to our leakage and we work with our customers to repair them, where possible. In some cases, we can do this free of charge.

The health, safety and well-being of our customers and colleagues is our number one priority, and in the early months of the pandemic we had to suspend this activity, except in essential cases. 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 could therefore come into contact with members of a household.

With the gradual easing of Government restrictions over the summer months and appropriate safety protocols being put in place to protect our people and our customers, we were able to restart this work. And with more customers being at home, the process to make appointments has been easier. However, due to the changing situation and the tightening of Covid-19 restrictions over winter, we have again had to scale back work in this area.

Due to the suspension of this repair activity for many months of this year, it is unlikely we will meet our planned number of customer side repairs this year. We are therefore carrying out more leakage prevention and repair activity in other areas to recover as much of the shortfall as possible.

Risks to our plan

The two largest risks to us meeting our target in 2020/21 are this winter’s weather and the on-going restrictions due to the Covid-19 pandemic.

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.

The impact of Covid-19 restrictions during the year, led to our leakage activity being behind our original plan, particularly relating to customer side leak repairs. We’ve been taking extra precautions during repairs to ensure social distancing and this means it takes extra time to repair each leak. In addition, we’ve had repair teams self-isolating, which has had an impact on the number of leaks we’ve been able to fix. We're continuing to closely monitor official guidance and review our plans quarterly so that we can adapt as official guidance changes.

We’ve recruited additional repairs teams, up by 10% from the November average, to reduce the impact of self-isolation requirements and to tackle the increase in leaks due to the colder weather.

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.

Leakage levels change throughout the year, so to measure and report our performance we take our daily leakage figures (in Ml/d) and average them for each month and in turn across the year.

The table below shows our leakage targets for the 2020/21 to 2024/25 period. Our leakage targets are now based on a percentage reduction from a baseline leakage level. The baseline leakage level is calculated using our annual average leakage for the three years between 2017/18 to 2019/20 and taking an average of these 3 values.

Our target for 2020/21 is a reduction of 4.1%. To achieve this reduction, we need to achieve an annual average leakage level of 569.5 Ml/d or lower. All the figures in this table have been calculated using the AMP7 leakage methodology and therefore historic data will differ from previous reports.

Leakage Targets for 2020/21 to 2024/25 and Baseline Leakage for 2017/18 to 2019/20

(All figures in Ml/d, except Leakage Reduction)

Leakage reduction remains one of our top priorities and we’re focusing on delivering our leakage reduction plans for 2020 to 2025 and ensuring we continue to improve our performance. We’ve committed to reducing annual average leakage by 20% from our 2019/20 level by the end of 2025 and by 50% in the longer term.

A new leakage reporting methodology has been implemented across the industry by our economic regulator, Ofwat, to better align leakage reporting between companies and improve transparency and benchmarking across the industry. The change has also included moving from an annual leakage target to a three-year rolling average target. All companies must conform to the new leakage reporting methodology by the end of 2020/21.

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 must be three valid nights of data within a reporting week to calculate leakage compared to one night under the previous method.
• The period 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 tool to implement the new reporting process that ensures compliance with the agreed methodology and allow employees across the company to view our latest reported leakage.

In August 2020, following the completion of data consistency and reliability checks, we moved to the new leakage reporting system. This means that 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.

All figures in this report have been updated to be consistent with the Ofwat AMP7 leakage reporting methodology.

Our economic regulator, Ofwat, investigated our leakage performance in 2017. In August 2018, we agreed a package of financial and non-financial commitments with 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.

At the end of October 2020, we provided Ofwat with our fifth 6-monthly review of our compliance against our Undertakings. We then met with Ofwat to discuss the report and our compliance on 17 December 2020. Ofwat has since confirmed that they are satisfied we have closed 6 of the 15 Undertakings and that we will not be required to update Ofwat in respect of these closed Undertakings. Our next 6-monthly compliance report will be provided to Ofwat before 1 May 2021.

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.

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