As a member of the government-led Water Saving Group (WSG), Ofwat is tasked with developing 'incentives for companies to improve their promotion of water efficiency'. As a first step Ofwat are proposing a water efficiency target for each company for the remainder of AMP4.  Each company will be set the target of reducing water delivered (in Ml/day) in 2008-09 and 2009-10 by 1%, 0.5% or 0.25% of the average volume of water delivered in the three years 2005-06 to 2007-08, the percentage reduction depending on its water stress classification. If the resulting target is less than the actual average water saving (via water efficiency activities) over the last three years the higher figure will be used as the target. Ofwat propose that the targets should be met through base operating expenditure.

Companies are required to notify Ofwat of their targets for 2008-09 and 2009-10 by 30 April 2008, which will be verified by Ofwat following receipt and assessment of the 2008 June return.  Ofwat will then monitor performance against the target by analysing June returns and will report progress in its annual 'Security of supply, leakage and water efficiency' report.

The water efficiency target builds on water companies’ existing duty to promote the efficient use of water to their customers and companies will be expected to develop their plans for meeting the target with reference to Ofwat's  'Water efficiency initiatives – good practice register'.  While individual targets will not be mandatory, Ofwat comment that they  ‘..will be a valuable opportunity to experiment and gather further evidence before any more refined targets at PR09'.

The issue of water efficiency is set to become increasingly important and will form an integral part of water resource planning in PR09 for the forthcoming  AMP 5 investment cycle.