Water companies to pay back £114m to customers - as ‘damning’ Ofwat reports finds all are ‘falling short’

Water companies will pay out £114 million to bill-payers after “damning report” has revealed not one company achieved Ofwat’s top category of “leading”.

Dwr Cymru, Southern, Thames, Anglian, Bristol, South East and Yorkshire Water all fell into the lowest category of “lagging” and the remaining 10 water companies were rated “average”.

According to regulator Ofwat, all water companies failed to meet key targets on reducing pollution, leakage and supply interruptions - and customer satisfaction continued to fall.

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.

If they fail to meet these, Ofwat restricts the amount of money they can take from customers.

Thames Water is the company which must return the most, more than £101 million, followed by Southern Water which must pay out £43 million.

The total industry amount of £114 million is offset by some companies being rewarded, such as Severn Trent Water taking £88 million and United Utilities taking £25 million.

Ofwat said these figures are provisional until it completes the review process.

David Black, Ofwat CEO, said water companies are “falling short” and while it may be “welcome to bill payers” it is “very disappointing news for all who want to see the sector do better.”

He added: “It is not going to be easy for companies to regain public trust, but they have 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 that since 2020, companies have shown improvements in reducing leakage and internal sewage, with all but one company achieving the target for unplanned outages. But progress has been too slow across the board.

The regulator found that companies have not fully invested their allowance for 2020-2023 to improve services.

It comes as Ofwat is currently investigating all six water companies for potential failures on sewage discharges into the environment.

It is also investigating Dwr Cymru and South West Water in relation to the accuracy of leakage reporting and per capita consumption.

Mike Keil, senior director at the Consumer Council for Water, said “customers are tired of not getting the service they deserve for the things they care about” and it is “right and fair that people get their money back when they don’t receive the services they were promised by some water companies.”

Labour shadow environment secretary Steve Reed commented that the report is “devastating” and “demonstrates the complete failure of water companies to act on the sewage scandal.”

On Monday (25 September), the Department for Environment, Food and Rural Affairs (Defra) said it is providing more funding to reduce the amount of times sewage is pumped out of storm overflows, adding another £4 billion on to the £56 billion it announced last year.

It has updated its Storm Overflow Discharge Reduction Plan to include as “high priority sites” those storm overflows that eject sewage into Marine Protected Areas, shellfish waters, Sites of Special Scientific Interest and bathing waters.

Defra said this will not result in any bill rises for customers until 2025 and that stopping all pollution would cost between £120 billion and £600 billion, which would increase annual water bills by between £271 and £817 by 2049.

NationalWorld has contacted Water UK for comment.