Water bills UK: 'Most' water companies to return millions to customers through lower bills over missed targets

Millions of households are set to have lower water bills as firms have fallen short of performance standards. Regulator Ofwat has announced that water companies are being forced to return millions of pounds to customers with Thames Water ordered to pay out the most.

The regulator found that most companies failed to meet key targets on reducing pollution, leakages and supply interruptions. In its annual review no company ranked in the "leading" 10 were marked as "average" and seven including Anglian Water, Bristol Water Dŵr Cymru, South East Water, Southern Water, Thames Water and Yorkshire Water were determined to be "lagging". The fines for underperforming suppliers will be passed onto customers through lower bills over 2024 and 2025.

Ofwat judges the performance of water companies in England and Wales each year against the “stretching” targets they set in 2019 for a five-year period until 2025. Thames Water will have to pay out nearly £74m to its 15m customers.

It comes after the firm was in crisis talks earlier this year over its massive £14bn debt pile. It managed to secure an emergency funding package from shareholders but last month the watchdog said it still has “significant issues to address” over its financial strength.

Anglian Water customers will see more than £27m taken off their bills and Dwr Cymru about £24m. However, some companies will be able to charge customers more after improving their performances. According to Ofwat, Severn Trent Water will be allowed to add £89m to the bills of the 4.6 million customers it serves from next year and United Utilities can charge more than £25m extra.

Ofwat said 12 firms will have to return around £193m to customers, partially offset by five firms charging about £123m more, resulting in a net total of £70m being paid out. The regulator had said in September that firms would return a net total of £114m but that amount was provisional until the review process was completed.