Water firms to cut customer bills by millions after missing targets

Households are to see almost £150 million taken off their water bills after 11 water suppliers have been hit by fines, regulator Ofwat has announced.

Among the fined companies, Thames Water and Southern Water were said to have performed the worst and will have to return almost £80m to customers, according to Ofwat.

Anglian Water, Northumbrian Water and Yorkshire Water, among others, also face fines following the regulator’s recent enforcement cases, as part of an ongoing investigation into wastewater treatment works.

“When it comes to delivering for their customers, too many water companies are falling short, and we are requiring them to return around £150 million to their customers,” said David Black, the chief executive of Ofwat for England and Wales. “We expect companies to improve their performance every year; where they fail to do so, we will hold them to account.

“All water companies need to earn back the trust of customers and the public and we will continue to challenge the sector to improve.”

However, some of these reductions could be offset by inflation-linked price rises in customers’ bills. All water companies will be permitted to increase charges in line with inflation, Ofwat said, using the consumer prices index including owner occupiers’ housing costs (CPIH) – which hit 8.6 per cent in the 12 months to August.

Moreover, other companies which exceeded their targets will be able to recover more money from customers. This is the case of Severn Trent Water, which performed particularly well in the regulator’s review and will be able to increase customer payments by £63m in the year ahead.

Ofwat’s review comes amid greater scrutiny of water companies during a period of drought and with some areas of the country facing hosepipe bans during the summer heatwaves.

These measures drew criticism from environmentalists, due to the lack of preparation for the year-on-year temperature increases and widespread water leakages from pipes across the country, which are said to be worsening an already critical situation by wasting billions of litres of water every day. 

In June 2022, the Environment Agency published a report identifying 62 “serious pollution incidents” that occurred last year, up from 44 the year before, in what it described as the worst performance on pollution seen in years.

In light of the “appalling” situation, the regulator called for the organisations’ executives to face prison time if they oversee serious and repeated pollution incidents, arguing that enforcement action and court fines for breaching environmental laws have proved to be unable to improve environmental performance.