INVESTIGATE

INVESTEGATE

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CASELEX

POTENTIAL PERPETRATORS

POTENTIAL VICTIMS

Our core causes of action against Thames Water and potentially the regulators are Tort (Negligence and Nuisance), Breach of Statutory Duty, Breach of Contract/Consumer Law, and Competition Law infringements. The underlying issues involve inadequate investment, poor maintenance, pollution incidents, service failures (supply interruptions, billing inaccuracies), and potentially exploitative pricing.

1. Tort (Negligence and Nuisance):

• Directly Affected Sectors/Industries (Losses):

  • Agriculture, Forestry, and Fishing (SIC 01-03; NACE A): Farmers and aquaculture businesses dependent on clean water for irrigation, livestock, or fish farming could suffer direct losses due to water pollution incidents. This includes crop damage, livestock illness, reduced yields, or fish kills. The probability of successful claims is relatively high if a direct causal link between pollution and quantifiable financial loss can be established. These parties might be highly motivated to join a media campaign due to immediate economic impact and public concern for food safety and environmental integrity.
  • Accommodation and Food Service Activities (SIC 55-56; NACE I): Hotels, restaurants, and other tourism-related businesses located near polluted waterways or experiencing significant water supply interruptions could suffer direct revenue losses due to decreased tourism, reputational damage, or operational disruptions. The probability of successful claims depends on the severity and duration of the impact and clear evidence of lost business. Their motivation to join a media campaign is also high due to direct financial harm and negative public perception.
  • Real Estate Activities (SIC 68; NACE L): Property owners, both residential and commercial, whose property value is diminished due to persistent nuisance (e.g., sewage odors, repeated flooding) or direct property damage from water incidents could claim losses. Homeowners in affected areas would be direct claimants. The probability of success here hinges on clear evidence of property value depreciation or direct damage, potentially supported by expert valuations. They would likely be very motivated to join a media campaign due to the impact on their homes and assets.
  • Construction (SIC 41-43; NACE F): Construction projects requiring stable water supply or facing delays due to infrastructure issues or pollution could incur direct costs. This is more about indirect costs or contractual penalties with the water company, but direct losses from on-site pollution could also occur. Probability of success is moderate, dependent on specific contract terms and clear causation.

• Indirectly Affected Sectors/Industries (Negative Spillovers):

  • Recreational, Cultural, and Sporting Activities (SIC 90-93; NACE R): Businesses operating recreational facilities (e.g., boating clubs, fishing charters, outdoor event venues) on or near affected waterways could experience reduced patronage due to pollution, even without direct physical damage. Probability of claiming compensation for indirect loss is lower but not impossible, especially if strong anecdotal and limited quantifiable evidence can be provided. Their interest in a media campaign would be strong due to damage to their environment-dependent business model.
  • Wholesale and Retail Trade (SIC 45-47; NACE G): Local shops and businesses in areas experiencing severe service disruption or persistent environmental issues could see reduced footfall and sales, even if not directly using water as an input. This is a diffuse impact, making direct claims for compensation difficult, but they would be interested in media campaigns to restore local conditions.
  • Human Health and Social Work Activities (SIC 86-88; NACE Q): Healthcare providers might see an increase in water-borne illnesses or stress-related conditions in affected populations due to water quality issues. This is a negative spillover that is very difficult to translate into direct compensation claims from a tort perspective, but it underlines a significant public health interest in the issue and strong motivation for policy change.

2. Breach of Statutory Duty:

• Directly Affected Sectors/Industries (Losses):

  • All Consumers (Households and Businesses): If a water company fails to meet statutory water quality standards or fulfil service obligations under the Water Industry Act 1991, all customers receiving that substandard service or water would be directly affected. This covers a very broad claimant base, transcending specific industries. The common type of harm is the provision of a service that does not meet legally mandated quality or reliability thresholds, leading to inconvenience, health risks, or operational disruptions. The probability of successful claims here depends on proving the breach of a privately actionable statutory duty, which is a key legal hurdle as noted in the source material. If such actionability can be established, the probability for the class is high. All consumers would be highly motivated to participate in a media campaign.
  • Manufacturing (SIC 10-33; NACE C): Industries requiring specific water quality for their processes (e.g., food and beverage, pharmaceuticals, textiles) or facing production halts due to water supply issues could suffer direct losses. Their claims would hinge on proving that the statutory duty breach directly caused operational or product quality issues. Probability of success is high if quality issues or supply interruptions are clearly linked to regulatory non-compliance. These industries would be highly motivated for direct compensation or operational stability.

• Indirectly Affected Sectors/Industries (Negative Spillovers):

  • Public Administration and Defence; Compulsory Social Security (SIC 84; NACE O): Local authorities and public services might face increased demand for alternative water supplies, public health interventions, or disaster response if statutory duties are severely breached. While not claimants for compensation, they are heavily impacted and would be interested parties in ensuring compliance.

3. Breach of Contract/Consumer Law:

• Directly Affected Sectors/Industries (Losses):

  • All Customers (Households and Businesses) with Supply Agreements: This is the most straightforward category for contractual claims. Any customer with a direct supply agreement could claim losses from poor service quality, billing inaccuracies, or failure to provide services with reasonable care and skill. This affects every sector that is a customer of Thames Water. The commonality of harm is the failure to deliver on the terms of the service agreement, directly impacting pocketbooks or operational efficiency. The probability of success is high for provable breaches like billing errors or prolonged, uncompensated supply interruptions. Motivation to claim compensation is very high across all customer segments.
  • Professional, Scientific, and Technical Activities (SIC 69-75; NACE M): Businesses such as law firms, consultancies, or IT services that rely on uninterrupted utilities for their operations could suffer direct contractual losses from downtime or increased operational costs due to service failures. Their claims would focus on direct contract breaches. Probability of success is high for quantifiable losses.
  • Administrative and Support Service Activities (SIC 77-82; NACE N): Call centers, security services, or general administrative offices would face similar disruptions and potential losses due to unreliable service or billing issues. Probability of success is high for provable contractual damages.

• Indirectly Affected Sectors/Industries (Negative Spillovers):

  • Financial and Insurance Activities (SIC 64-66; NACE K): Banks, insurance companies, or other financial services might see indirect impacts from a struggling utility, such as increased risk for loans or investments, or claims related to property damage. Direct claims for spillovers are difficult, but they would be interested in the overall financial health and regulatory stability of the sector.

4. Competition Law Infringements:

• Directly Affected Sectors/Industries (Losses):
  • All Consumers (Households and Businesses): If water companies engage in anti-competitive practices (e.g., abuse of dominance leading to exploitative pricing), all consumers in the relevant market are directly harmed through higher prices or reduced quality that would not exist in a competitive market. This constitutes a common type of financial harm, even if the exact amount differs per customer. The probability of successful claims through follow-on actions would depend on a prior finding of infringement by a competition authority (like the CMA). If an infringement is found, the probability of successful class action claims is high, as the commonality of harm is inherent to the competition violation itself. Motivation to claim compensation for overcharges would be very high across the entire customer base.
  • Any Potential Entrants or Innovators into related water services markets: If anti-competitive practices stifle innovation or entry into complementary services (e.g., smart water management, specialized treatment), these potential market players suffer direct losses from being excluded or disadvantaged. Their claims would be for lost profits or market access. Probability of success depends on demonstrating that the anti-competitive conduct directly prevented their market participation. These would be highly motivated to join a media campaign to highlight anti-competitive barriers.
  • Other Utilities or Infrastructure Providers (e.g., Gas, Electricity, Telecoms – SIC 35, 42-43, 61; NACE D, F, J): These sectors, particularly those that require shared infrastructure access or face similar regulatory scrutiny, could be indirectly impacted by precedent set by a competition law finding in the water sector, or directly by anti-competitive behavior in shared inputs (e.g., land access, specialized labor). They might also be affected by negative spillovers if the water sector’s issues undermine overall investor confidence in regulated monopolies. While direct claims might be complex, these players would have a strong interest in seeing consistent and fair regulatory enforcement across all utilities.

In summary, the common thread of harm across these causes of action, which forms the basis for collective claims, is the detrimental impact on the quality, reliability, and cost of a fundamental public utility service (water and wastewater) and/or environmental damage, resulting from alleged systemic failures in company conduct and/or regulatory oversight. This harm is shared by virtually all consumers, households, and businesses within Thames Water’s service area, making them prospective class members. The probability of success in claiming compensation or restitution through mediation or legal action generally increases with the clarity of the legal breach (e.g., billing errors are easier than complex nuisance claims) and the ability to quantify direct financial loss across the class. Media campaigns would attract high participation from all directly affected groups seeking redress or systemic change.

First, let’s consider the nature of COCOO. From the previous conversation, COCOO is categorized as “management consultancy activities other than financial management” (SIC: 70229) and “investigation activities” (SIC code: 80300). This immediately places COCOO within the broad Business Services sector, specifically within professional, scientific, and technical activities, and administrative and support service activities. Its stated mission to protect free competition, consumers, and the public interest, and its focus on investigating “conducts underlying undertaking agreements and public authorities,” means it acts as a claimant representative in the public interest.

Now, let’s deduce the exact sectors, industries, and markets relevant to our case, and identify potential parties. Our primary target, based on previous discussions, is Thames Water (TW).

Thames Water is a water and wastewater company. To precisely locate its industry, we can consult the SIC, NACE, and ICB codes.

• SIC Codes (Standard Industrial Classification): The most direct SIC codes for water and wastewater activities would be within Division 36 (Water collection, treatment and supply) and Division 37 (Sewerage). Specifically, this would include:

  • 36000: Water collection, treatment and supply.
  • 37000: Sewerage. These codes directly identify Thames Water’s core operational industry.

• NACE Codes (Nomenclature of Economic Activities): Correspondingly, in the NACE system, water and wastewater services fall under Section E: Water supply; sewerage, waste management and remediation activities.

  • 36: Water collection, treatment and supply.
  • 37: Sewerage. This confirms the core industry as Water Supply and Sewerage Services.

• ICB Codes (Industry Classification Benchmark): The ICB system provides a more granular view of sectors and industries relevant to financial markets. Based on typical classifications for utilities:

  • Level 1: Utilities
  • Level 2: Water Utilities
  • Level 3/4: This level would further specify Water or Wastewater Utilities. This places Thames Water firmly within the Water Utilities industry, a sub-sector of the broader Utilities sector.

• ISIN Codes (International Securities Identification Number): The ISIN codes document lists various companies and their associated ICB codes. While “Thames Water” isn’t explicitly listed as a publicly traded entity in the ISIN file (given its financial structure involves significant debt holdings by investor groups rather than being a straightforward publicly listed company whose ISIN would be on a general index list), the presence of other water companies in the ISIN data, alongside their ICB codes, would confirm the sector. For instance, if other water companies were listed with ISINs, they would fall under the Utilities/Water Utilities ICB categories mentioned above.

Based on these deductions, the direct parties in our case, and the industries/markets involved, are:

Prospective Class Claimants:

The primary class claimants would be the consumers and general public served by Thames Water. Their common type of harm, as previously discussed, stems from alleged failures in operational conduct, environmental performance, and service provision, leading to issues like pollution, supply interruptions, and potentially unfair billing or pricing. This includes both residential and business customers impacted by Thames Water’s operations. The “public interest” itself, which COCOO is mandated to protect, also represents a broad claimant base.

Co-Defendants / Other Relevant Parties:

1. Thames Water (TW): The main undertaking whose operational conduct, environmental performance, and service provision are under investigation. Its core business falls under “Water collection, treatment and supply” and “Sewerage.” Its email address is customerservices@thameswater.co.uk.

2. Ofwat: As the economic regulator of the water sector, Ofwat is a crucial co-defendant. The prior discussions highlight potential grounds for Judicial Review against Ofwat for alleged failures in exercising its statutory functions and regulatory conduct. This includes concerns about inadequate price controls, insufficient enforcement against non-compliance, and issues with regulatory oversight. Ofwat’s role as a public authority means it falls under general public administration classifications, but its specific function places it squarely in the Economic Regulation of Water Utilities market.

3. Environment Agency (EA): As the environmental regulator, the EA is another key co-defendant. Similar to Ofwat, the EA’s statutory functions and regulatory conduct regarding environmental permits, water quality standards, and pollution enforcement are subject to scrutiny, potentially via Judicial Review. Its domain is Environmental Regulation of Water and Wastewater Services. The email provided for the EA is enquiries@environment-agency.gov.uk.

4. Competition and Markets Authority (CMA): The CMA is a critical party, as COCOO is also raising potential competition infringements and market distortions in the water sector. While directly regulating competition across all sectors, the CMA’s involvement in our specific case focuses on its oversight of Competition in the Water Sector and its role in reviewing price redeterminations by Ofwat.

5. HM Treasury (HMT): While less directly involved in day-to-day operations, HMT is identified as a party in previous communications for investigations into its decisions, policies, and actions, particularly concerning fiscal measures and their impact on various sectors, including potentially utilities or infrastructure. This would place HMT within the Central Government Administration sector, specifically related to economic policy and public finance.

6. Other Water Companies (e.g., Anglian Water, Northumbrian Water, Southern Water, South East Water, Wessex Water): Although Thames Water is our primary focus, the documents reveal a commonality of issues and arguments being raised by other water companies in their own price redeterminations. This indicates that these companies operate within the same Water Utilities market and face similar regulatory challenges regarding investment, performance targets, and financial models. While not direct co-defendants in a class action focused on Thames Water’s specific conduct, their parallel arguments and shared experiences are crucial for establishing systemic issues within the sector.

7. Investors in Thames Water (and other water companies): These are identified as an “Investor Group” comprising over 100 financial institutions holding significant debt in Thames Water and other UK water companies. Their interest lies in ensuring a “sustainable financeable settlement” and investability of the sector. While generally not claimants or defendants in tort/contract claims against the water company for operational failures, they represent a powerful stakeholder group whose financial interests are directly impacted by the outcomes of regulatory decisions and company performance. They represent the Financial Markets for Utilities Infrastructure Debt and Equity.

The overall sectors and markets implicated in our case are therefore:

• Water Supply and Sewerage Services (core industry of Thames Water and other water companies).
• Economic and Environmental Regulation (roles of Ofwat and Environment Agency).
• Competition Regulation (role of the CMA).
• Central Government Administration (role of HM Treasury).
• Financial Markets (investors in the water sector).

The commonality of harm for prospective class members (consumers) stems from alleged systemic failures in the operation and regulation of a natural monopoly, leading to shared negative impacts on service quality, environmental health, and fairness of charges across the customer base. The identified co-defendants are the bodies whose actions, or inactions, contribute to these alleged systemic failures.

From “Tort Claims Against UK Regulators,” the core extraction is the concept of potential legal action against regulators themselves for failures in their statutory functions or regulatory conduct. This document discusses Judicial Review (JR) as a primary avenue, where challenges can be based on illegality (acting beyond powers, errors of law, failing mandatory duties), irrationality (unreasonable decisions), procedural impropriety (flawed processes, bias, failure to follow procedures), or failure to consider relevant factors. The commonality of harm here stems from the systemic impact of a regulator’s alleged failings on a broad group of affected parties. If, for instance, a regulator consistently fails to ensure effective enforcement against known breaches by regulated entities, all consumers within that regulated sector could suffer a common type of harm, such as deteriorating service quality, increased pollution, or unfair pricing, due to inadequate oversight. This establishes a collective interest in challenging the regulator’s conduct, as the harm is not individualized but flows from a common regulatory failure impacting a defined group.

The “clp duopoly strict liability mediaset.pdf” attachment, while seemingly focused on a different industry, provides crucial conceptual frameworks regarding “duopoly strict liability” and “collective harms.” It emphasizes the idea that even in a market dominated by a few players (a duopoly), certain conducts can lead to widespread, shared negative consequences for consumers. The core idea here is that the harm is not unique to each individual but is a collective outcome of the dominant players’ actions or omissions. For our case, this reinforces the argument that when powerful entities, such as water companies or even regulators in their oversight role, engage in similar or coordinated problematic conduct, the resulting harm is diffused across a large class of affected individuals, establishing the commonality necessary for a class action. The document suggests that such collective harms can arise from systemic issues, rather than isolated incidents, which strengthens the argument for commonality.

“CAT FOCOL HOW2.pdf” is particularly instructive regarding “FOCOL” (Follow-On Claims based on Competition Law Infringements) and the Competition Appeal Tribunal (CAT). This document details how individuals or groups can bring claims for damages resulting from breaches of competition law. The relevance to our case lies in the inherent commonality of harm in competition law infringements. If, for example, water companies are found to have engaged in anti-competitive practices, the harm (e.g., inflated prices, reduced service quality) is by its very nature experienced by all consumers affected by that market behavior. The document delves into the types of evidence needed and the process for establishing collective redress, emphasizing that a common harm, even if the precise quantum of damages differs per individual, is a foundational requirement for such collective claims. This directly addresses the “common type of harm shared by all prospective class members” by linking it to market-wide or systemic competition infringements.

Finally, “COCOO’S 9 TECHS.txt,” likely an internal document outlining our organization’s operational principles or investigative techniques, contributes by framing our mission around “protecting free competition, consumers and the public interest.” It states that we “investigate, in any jurisdiction worldwide, of conducts underlying undertaking agreements and public authorities” and “may seek compensation and restitution for British and international victims.” This demonstrates our organizational mandate to address collective harms and seek redress for broad groups of victims, directly aligning with the concept of class actions. The phrase “potential harm” to be addressed by investigation implies looking for systemic issues, rather than isolated incidents, thus reinforcing the pursuit of commonality of harm.

In synthesis, these attachments collectively bolster our position by providing:

1. Legal avenues: Explicitly outlining Judicial Review against regulators for systemic failures, and implicitly supporting follow-on damages claims for competition infringements in the CAT.
2. Conceptual framework for commonality: Reinforcing that duopolistic behavior or market-wide competition abuses inherently create common types of harm across a class of consumers, rather than purely individual grievances.
3. Types of harm: Pointing towards damages arising from inadequate infrastructure, pollution, poor service quality, unfair pricing, and distorted market practices as common grievances experienced by all consumers in the affected sector.
4. Organizational mandate: Affirming COCOO’s dedication to investigating and seeking restitution for collective harm to consumers and the public interest.

This robust foundation allows us to articulate that the alleged failures of water companies, and potentially their regulators, are not isolated incidents but systemic issues leading to a common type of harm suffered by a broad class of consumers, making collective legal action a fitting and necessary response.

We are looking to build a robust understanding of the potential liabilities of water companies. This involves scrutinizing various aspects of their operations. Firstly, in terms of tort, we are investigating potential claims of Negligence and Nuisance. Negligence claims would arise if there is evidence that a company has failed to exercise a reasonable standard of care in its operations, leading to foreseeable harm. This could manifest in inadequate investment in infrastructure, insufficient maintenance practices, or operational failures that cause pollution incidents, supply interruptions, or property damage. For a claim in Nuisance, we would examine instances where a company’s actions cause an unreasonable interference with another’s use or enjoyment of their land, such as through repeated pollution events. Establishing a clear breach of a duty of care, a direct causal link to the harm suffered, and quantifiable damages are crucial for both.

Secondly, breaches of statutory duty are a significant area of focus. Water companies operate under a strict regulatory framework, including environmental permits, water quality standards, and service obligations mandated by the Water Industry Act 1991 and associated regulations. Non-compliance with these specific legal duties could form the basis of claims. A key legal question in such cases is whether Parliament intended for these statutory duties to be enforceable through private law claims. We would look for evidence of non-compliance, such as discharge data indicating permit breaches or failures to meet water quality standards, as well as shortcomings in fulfilling service obligations under the Act.

Thirdly, potential breaches of contract arise from the supply agreements water companies have with their customers. Evidence of consistently poor service quality, systemic issues with billing accuracy, or inadequate complaint handling could indicate a failure to provide services with reasonable care and skill as implied by these contracts. The justification for price increases, especially when viewed against a backdrop of documented performance failures, also becomes relevant under broader consumer protection principles concerning fairness. While private enforcement in competition law can face specific hurdles, we are also considering potential breaches in this area.

Our investigation would involve a comprehensive evaluation of relevant information. We would seek detailed investment records to assess whether reasonable steps were taken to prevent pollution and maintain service reliability. We would also examine performance targets set by the companies themselves for pollution and leakage reduction, and their actual performance against these targets, to benchmark their adherence to regulatory expectations. Detailed sewage discharge data, including volume, duration, and location of incidents, would provide direct evidence for nuisance claims and permit breaches. This kind of data has been central to past litigation involving water companies. Furthermore, we would probe the companies’ monitoring and response protocols for water quality and pollution incidents to assess the reasonableness of their operational practices and mitigation efforts. We would also seek internal assessments of the environmental and public health impacts of their discharges to understand their awareness of potential harm. Detailed inspection and maintenance procedures are crucial for determining if the required standard of care was met to prevent failures, leaks, and pollution. Lastly, customer service metrics and complaint handling procedures would inform potential claims relating to contractual and consumer law breaches, particularly in evaluating service quality, billing practices, and the fairness of price increases in light of performance issues.

Our strategy is informed by an understanding of the broader regulatory and legal landscape. We recognize that past litigation, such as the CAT Water Cases involving Professor Roberts, focused on allegations of systematic under-reporting of pollution incidents. While direct competition law claims based on such conduct might face jurisdictional challenges under the Water Industry Act, evidence of the true extent of pollution, obtained through detailed discharge data, could strongly support common law claims in nuisance or breach of statutory duty, and potentially demonstrate a pattern of disregard relevant to assessing negligence. Such evidence could also indirectly support judicial review claims against regulators for alleged failures in monitoring or enforcement. We are aware that the CAT judgment left open the possibility for competition law to apply to exploitative abuses by statutory monopolies, even if direct breach of license conditions is currently limited for private claims.

We are also mindful of the context provided by reports from regulatory bodies like Ofwat and the National Audit Office (NAO). NAO findings indicating poor sector performance on pollution, leakage, and supply interruptions, coupled with slow asset replacement rates, provide a strong contextual basis for claims alleging inadequate investment and maintenance. Ofwat’s price review process sets Performance Commitments and Outcome Delivery Incentives, and failure to meet these targets is a key indicator of poor performance. The argument that consumers are “paying twice” – once through bills for underperformance, and again for future increases to fix historical problems – directly links company underperformance to charging practices, which is highly relevant for consumer law arguments about fairness and potential challenges to Ofwat’s’ price-setting decisions.

While section 18(8) of the Water Industry Act 1991 presents a significant obstacle for private claims fundamentally relying on a breach of a water company’s license conditions or statutory duties under the Act, common law tort claims may offer an alternative path. For instance, a claim in nuisance based on the physical impact of sewage discharges on property rights, or a negligence claim alleging operational failures leading to foreseeable damage, could be arguable if they are pleaded independently of specific Water Industry Act duties or license conditions. The type of evidence we seek, focusing on investment history, actual discharge records, impact assessments, and maintenance practices, is well-suited to supporting such common law tort actions, as they depend on establishing duties of care and property rights separate from the regulatory framework. Careful legal analysis and precise pleading will be critical to navigate these complexities.

Evidence obtained from Thames Water in response to our inquiries can serve a dual purpose. Demonstrating a history of underinvestment, persistent permit breaches via discharge data, or inadequate maintenance procedures would provide direct evidence for claims against the company itself in tort or contract, or for statutory breach where actionable. Simultaneously, this very same evidence could be used to strengthen a judicial review case against relevant regulators, such as Ofwat or the Environment Agency. If it can be shown that a regulator was aware, or reasonably ought to have been aware, of systemic failings but failed to take appropriate action, this would bolster an argument that the regulator acted irrationally or failed to fulfill its statutory duties. The factual basis established through our inquiries directed at Thames Water directly underpins any legal challenge to regulatory oversight.

Several documents emphasize that water companies, including Thames Water, face unprecedented investment needs in the current AMP period (AMP8, 2025-2030) and beyond, with industry-wide expenditure projected at £104 billion, a 71% increase on AMP7¹¹¹¹. Thames Water alone is expected to spend £8.3 billion on enhancements in AMP8². This massive capital program is driven predominantly by new statutory requirements, particularly from the WINEP and WRMP³. This step-change in investment is permanent, not temporary, with projections showing approximately £270 billion of enhancement investment between AMP8 and the end of AMP12 for the sector⁴.

Despite this crucial need, a consistent theme is that Ofwat’s Final Determination (FD) fails to provide sufficient funding and an appropriate balance of risk and return to attract the necessary investment. The FD is perceived as fundamentally mis-calibrated and ultimately incompatible with Ofwat’s duties⁵. For instance, Anglian Water argues that its investors will not receive a net positive cash flow until after AMP10 (15 years) and even then, dividend yields are projected to be below 2%⁶. This raises serious concerns about the “investability” and “financeability” of water companies⁷⁷⁷⁷. S&P Global Ratings has already concluded that the amount of raised capital will likely fall short of Ofwat’s assumptions

The regulatory framework is criticized for being increasingly complex, reactive, and unpredictable, undermining resilience and increasing risk for the sector⁹. There’s a widespread concern that insufficient weight has been given to real-world evidence over notional assessments or modeling, leaving companies unable to fund vital tasks¹⁰. Specific points of contention include:

• Underfunding of Base Costs and Capital Maintenance: Several companies argue that base allowances are implausibly thin and insufficient to finance required activities, leading to a significant funding gap^{11111111111111111111111111111111}. This is compounded by what are considered “poorly evidenced and inaccurate assumptions as to what base buys”¹². For example, Anglian Water claims a £500 million unfunded base cost pressure ¹³ and that the FD wrongly assumes base funds a 0.3% mains renewal rate rather than the evidenced 0.2%¹⁴. This could lead to increased risk of critical asset failure, higher long-term costs for customers, and potential breaches of duties
• Overly Ambitious and Unachievable Performance Targets (PCLs) and Penalties (ODIs): The FD sets ambitious PCLs without commensurate funding, dooming the industry to significant penalties^16161616. Anglian Water anticipates significant underperformance payments even with substantial efforts^17171717. The ODI framework is seen as disproportionately punitive, with some targets being unachievable even for efficient companies^18181818. The incentive rates for pollution incidents, for instance, are deemed excessively high compared to their environmental impact¹⁹. There are concerns that this incentivizes short-term fixes over long-term solutions, and even discourages frontier performance
• Restrictive Price Control Deliverables (PCDs): PCDs, while conceptually supported, are seen as overly prescriptive, introducing unnecessary cost and risk^21212121. They restrict companies’ flexibility to manage resources efficiently and respond to changing circumstances, which is critical given the scale of AMP8 investments²². Time-incentive PCDs are particularly problematic, forcing adherence to fixed timetables which may not align with optimal or efficient delivery²³. This “regulatory micromanagement” ²⁴ can lead to inefficient choices and increased exposure to penalties
• Unreliable Econometrics and Modeling: Ofwat’s econometric models, used for cost assessment and setting efficiency targets, are criticized for being insufficiently grounded in evidence and lacking predictive power²⁶. Issues include over-reliance on older, pre-crisis productivity data ²⁷, unsubstantiated assumptions about future productivity growth ²⁸, and a failure to adequately account for idiosyncratic costs or regional factors like density²⁹. The “frontier shift” (Ongoing Efficiency challenge) of 1% per annum is widely seen as unachievable and not supported by economic evidence, implicitly assuming utilities can consistently outperform wider UK productivity growth
• Increased Risk Profile and Inadequate Cost of Capital: The water sector’s risk profile has significantly increased since PR19 due to regulatory uncertainty, the challenges at Thames Water, and a sharp shift to a higher interest rate environment^{313131313131313131}. Despite this, the FD’s cost of equity (5.1%) is argued to be too low to attract the necessary investment, failing to reflect market realities and leading to a “lose-lose” situation for investors^32323232. The traditional CAPM model used by Ofwat is criticized for underestimating the cost of equity in a period of significant economic change³³.

The collective message from these documents supports COCOO’s position that the current regulatory approach risks undermining the sector’s ability to deliver essential services and environmental improvements. The consistent arguments across multiple water companies regarding underfunding, unrealistic targets, and a flawed regulatory model provide strong grounds for our case, emphasizing potential breaches of statutory duties, consumer protection, and the public interest.

Based on our earlier conversation, here is the list of findings of infringement, failings, and other actions uncovered by Ofwat between January 2023 and May 2, 2025:

Open Enforcement Cases:

• (Feb 12, 2025) Thames Water: Investigation into potential delays in meeting key environmental protection programmes.¹
• (Dec 19, 2024) Thames Water: Investigation into compliance with Licence Condition P30.
• (Aug 6, 2024) Northumbrian Water: Investigation into the management of its sewage treatment works and sewerage networks.
• (Aug 6, 2024) Thames Water: Investigation into the management of its sewage treatment works and sewerage networks.²
• (Jul 16, 2024) Dŵr Cymru (Welsh Water), Hafren Dyfrdwy, Severn Trent, United Utilities: Investigations into whether they are operating their sewage treatment works in line with environmental obligations.³
• (Nov 16, 2023) South East Water:⁴ Investigation into supply resilience.
• (May 23, 2023) South West Water: Investigation into the accuracy of its reported leakage and per capita consumption performance.
• (Ongoing from before Jan 2023) Anglian Water, Wessex Water, Yorkshire Water: Investigations into the operation of their sewage treatment works.
• (Ongoing from before Jan 2023) Southern Water: Subject to enforcement monitoring following a previous case.

Closed Enforcement Cases / Undertakings:

• (Opened Mar 20, 2025) Yorkshire Water: Enforcement case regarding management of sewage treatment works and networks.⁵
• (Opened Aug 23, 2024) Thames Water: Enforcement case in relation to its credit ratings.
• (Opened May 28, 2024) Dŵr Cymru / Welsh Water: Enforcement case regarding accuracy of leakage and per capita consumption reporting.
• (Opened Nov 29, 2023) Olympos Water: Investigation into a breach of Standard Licence Conditions.
• (Apr 28, 2023) Tideway: Accepted an undertaking for breach of licence conditions.

Proposed Penalties / Other Findings:

• (Aug 6, 2024) Ofwat proposed significant penalties for failures in managing wastewater treatment works:⁶
  • Thames Water: £104 million (proposed)
  • Yorkshire Water: £47 million (proposed)
  • Northumbrian Water: £17 million (proposed)
• (Oct 8, 2024) Ofwat reported a net sector underperformance penalty of £157.6 million for the 2023-24 period due to companies failing to meet targets, expected to be returned to customers via reduced bills.⁷