Water companies will have to return £157.6 million to customers (original) (raw)

Customers could see lower bills next year after water companies were ordered to return nearly £158m for missing key targets on issues like pollution. Dŵr Cymru Welsh Water is one of three companies who have been categorised by watchdog Ofwat as "lagging behind".

Industry regulator Ofwat said on Tuesday, October 8 that water companies will have to pay a £157.6 million penalty after missing key targets on reducing pollution, leaks and supply interruptions while customer satisfaction continues to fall. Chief executive David Black warned companies that “money alone” would not solve the issue and there needed to be a change in culture.

Ofwat assesses the performance of the 17 largest water and wastewater companies in England and Wales each year against key targets for issues such as sewer flooding, supply interruptions and water leaks. For the second year in a row, no company achieved the top rating, although some companies did show an improvement from last year. For the latest Welsh news delivered to your inbox sign up to our newsletter

Four companies moved up from 'lagging behind' to 'average'; South East Water, South West Water (Bristol region), Thames Water and Yorkshire Water, but the report said performance improvements are inconsistent across the sector. It also says that drinking water quality continues to be excellent in England and Wales, with public supplies consistently meeting the stringent standards set.

Dŵr Cymru Welsh Water, Anglian Water, and Southern Water have been categorised as 'lagging behind' and are required to continue to provide Service Commitment Plans alongside the four companies that moved into 'average' to ensure improvements are sustained. Thames Water moved up a category from ‘lagging’ to ‘average’ as it met six of its performance commitments and improved on leakage and water supply interruptions.

Mr Black said: "This year's performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect. It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings.

"Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the government or regulators tell them to act. As we look towards the next price control, the challenge for water companies is to match the investment with the changes in company culture and performance that are essential to deliver lasting change.

"However, we are beginning to see that some companies are beginning to change their culture and adopt a more innovative and forward-thinking approach to tackling pollution. Severn Trent is taking action to cut sewage overflows with 617 improvements at 467 sites, delivered by over 400 specialist employees with plans in place for further investment. We need to see more firms showing the same sense of urgency and action."

For the worst performing companies, failure to meet the targets means they will now have to collectively return £157.6m to customers on their bills for 2025-2026. A Welsh Water spokersperson said: “We are working hard to deliver the improvements that we know we need to make and our customers expect of us and have been outlined by Ofwat. Such improvements take time and are supported by detailed investment plans to ensure progress.

“As a water company with no shareholders, our focus is on the service we deliver our customers and reducing our impact on the environment. Whilst Ofwat’s report published today is for 2023/24, we have seen some positive signs so far this year (2024/25). We are, however, only six months through the year and there’s still need for significant, sustained improvement.

"Between 2025-2030 we’ve put forward a record investment package of £4bn, this is essential to support the improvement in performance we are seeking to deliver, including £2.5bn targeted at environmental improvement . This investment will drive improvements for customers and ensure a high standard of performance across the company."

Chief executive of campaign group River Action, James Wallace, said: "This might sound like a lot of money but frankly it is a drop in the ocean for polluting water companies that have handed billions in dividends and interest payments to investors. Clean and abundant water and healthy ecosystems are fundamental to human life and our economy.

"Yet, water companies continue to pollute the nation's waterways without facing the full force of the law or sufficient penalties. The regulatory and financial system that has perpetuated the scandal of profiteering water companies must change now."

He said the new Government was taking some positive steps, including a review of the water sector and the introduction of a Water Bill, but said the current draft of the Bill fell short. He added: "There is an urgent need for the Government to end polluting for profit, and ensure regulators have the necessary funding from the Treasury to enforce existing laws."

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