Investigation into whether Thames Water is contravening obligations in its Licence and the Wholesale Retail Code

Case summary (updated 19 August 2021)

On 24 November 2020, we opened an investigation under the Water Industry Act 1991 into whether certain of the data about customers that Thames Water made available to retailers at the time of the opening of the business retail market in April 2017 was accurate. We also considered whether Thames Water had and has in place appropriate management resources and systems of planning and internal control to ensure that it is able to carry out its regulated activities.

Summary of Ofwat’s findings

Our investigation has found that Thames Water breached a number of its regulatory obligations:

  • Condition R2 (as was) of its Licence, by failing to ensure that the data that it collected and uploaded into the business retail market systems (CMOS) ahead of market opening was sufficiently accurate to enable the effective functioning of the business retail market;
  • certain requirements of the Market Terms of the Wholesale Retail Code, by failing to maintain accurate data and correct known data errors within CMOS; and
  • Condition F (as was) and now Condition P of its Licence, by failing to ensure that it has in place adequate management resources and systems of planning and internal control to enable it to carry out its regulated activities.

As a consequence of these breaches, some retailers and their non-household customers were incorrectly charged for their water and sewerage services.

These breaches were largely due to Thames Water’s failure to ensure it has in place appropriate data management and assurance processes and the necessary oversight to ensure that it is meeting its regulatory obligations.

To address the problems identified in our investigation, Thames Water has offered a package of undertakings that will:

  • correct the errors and refund retailers and their customers for amounts overcharged;
  • compensate retailers for the harm they have suffered as a result of the data errors;
  • improve the way in which it investigates complaints and remedies problems identified through these;
  • improve the way in which it manages both data and large projects that might involve the transfer of data; and
  • improve its performance in relation to key industry data metrics.

We consider that the undertakings, when fully implemented, will address our outstanding concerns and therefore do not consider that it is necessary for us to issue and enforcement order or direction in this case.

Next steps

We are now proposing to accept the undertakings and impose only a nominal £1 penalty on Thames Water for its breaches, rather than imposing a more significant penalty. We are inviting interested parties to provide comments on our proposals. We will take any representations into account before making a final decision. The closing date for comment is Friday, 17 September 2021.

Date opened

24 November 2020

Relevant powers

Sections 18-22A, 66DA and 117F of the Water Industry Act 1991




The issues considered by this investigation had previously formed part of our Competition Act 1998 (“CA98”) investigation into Thames Water, but we no longer consider that the CA98 is the most appropriate tool to investigate and address these issues. We therefore opened this Water Industry Act investigation in November 2020.

Under sections 18-22A of the Act, if as a result of our analysis we consider that Thames Water is breaching the requirements of its Licence and that the breach is not trivial, we have a duty to issue an enforcement order requiring it to take such steps as are necessary to end its breach. In addition, where we are satisfied that Thames Water has contravened or is contravening its Licence, we may impose a financial penalty.

Under sections 66DA(4) and 117F(4) of the Act, if as a result of our analysis we consider that Thames Water is not complying with the Wholesale Retail Code, we may give it a direction to take specific action to bring itself back into compliance.


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