Thames Water has been pursuing a vigorous public relations campaign in the wake of its imposition of a hosepipe ban on its customers. Day after day we have been assailed by advertisements and mail shots explaining how much it is doing to conserve water on our behalf and urging us to join it in its grand project.

The news this week that the company has effectively had to swallow a £150m penalty for losing so much water puts its PR activities into stark perspective.

Between them, the water regulator Ofwat and Thames Water have come up with what appears to be a creative way for the company to avoid a fine and to put right some of the wrongs of the past. Ofwat says that the £150m will be spent on works to reduce leakage over and above those that Thames Water is committed to.

What is more, the money will have to come at the cost of its shareholders.

Quite how this will be enforced is not so clear. Ofwat must keep a close eye on Thames Water to ensure that other services do not slip and that the cost is not passed on in some way to its customers.

If Ofwat can achieve that then we should all benefit from more secure supplies. We trust also that Thames Water will also have learned a lesson going into the future that it needs to focus more of its resources on conserving our precious water.

It is questionable, however, what real difference this week's announcement is going to make. In the same breath, Ofwat said that it was relaxing Thames Water's leakage targets over the next couple of years. In other words, it will be able to get away with losing more water than was originally intended.

The new targets may reflect the reality that Thames Water has not been hitting its targets and will not be able to hit them until the extra spending it has promised kicks in. It is no consolation, however, to consumers who face further hosepipe bans and drought orders while water wastes away from Thames's leaky pipes.

The reality is that Thames Water has not hit its leakage targets since 1999/2000.

Until it does so, it cannot propose with any authority major developments like the new reservoir planned for Oxfordshire.