Water firms to return £114m to customers for serious underperformance

(Sharecast News) - Water and wastewater companies in England and Wales will be required to return £114m to their customers next year due to significant underperformance, it was announced on Tuesday. Water industry regulator Ofwat's decision resulted from companies' failure to meet the stringent targets set for the 2020 to 2025 period, which were intended to promote improved outcomes for both consumers and the environment.

Ofwat's announcement was made in conjunction with the release of its annual Water Company Performance Report.

The report evaluates companies based on common metrics such as pollution incidents, customer service, and leakage and classifies companies as 'leading', 'average', or 'lagging'.

This year, no water company has achieved the 'leading' status.

The report listed 10 companies in the 'average' category, while seven were found 'lagging' - Anglian Water, Dŵr Cymru, Southern Water, Thames Water, Yorkshire Water, Bristol Water, and South East Water.

An assessment of performance over the last three years, since the beginning of the current regulatory cycle in 2020, revealed a mixed picture.

Ofwat said there had been notable improvements in certain areas, like reducing internal sewer flooding and leakage.

Last year, all companies except one reached the required performance level for unplanned water outages.

However, the pace of progress was concerning, with the regulator noting that in the 2022-2023 period, less than half of the water companies reached their set targets in reducing pollution incidents.

Similarly, under half managed to meet their leakage performance commitments.

The lacklustre performance correlated with a dip in overall customer satisfaction over the last year.

Additionally, Ofwat highlighted another area of concern, noting that most companies had yet to use their allocated funds for the 2020 to 2023 period to enhance service delivery.

"The targets we set for companies were designed to be stretching - to drive improvements for customers and the environment," said Ofwat chief executive officer David Black.

"However, our latest report shows they are falling short, leading to £114m being returned to customers through bill reductions.

"While that may be welcome to bill payers, it is very disappointing news for all who want to see the sector do better."

Black said it would not be easy for companies to regain public trust, adding that they needed to start with better service for customers and the environment.

"We will continue to use all our powers to ensure the sector delivers better value."

Ofwat said it was currently investigating all 11 water and wastewater companies, with live enforcement cases for six companies for potential failures on sewage discharges into the environment.

There were also two live enforcement cases into Dŵr Cymru and South West Water concerning the accuracy of reporting leakage and per capita consumption performance.

Reporting by Josh White for Sharecast.com.