Water companies ordered to pay customers £158m following poor performance

8 October 2024, 07:46 | Updated: 8 October 2024, 08:19

Water companies will be forced to pay a £157.6 million penalty after missing key targets on pollution, leaks and supply interruptions.

The performance penalty, revealed by Ofwat on Tuesday, will come in the form of lower bills to customers in 2025-2026.

Last year, the water regulator ordered UK firms to pay back £114million following similar findings.

It comes as customer satisfaction continues to fall, with water companies missing key targets on issues including pollution.

The key targets were set by Ofwat between 2020-25, with the UK's water regulator labelling the findings "disappointing" after firms fell short of expectation.

In reality, that penalty will equate to a couple of pounds off the average household bill.

It comes as water bills across England and Wales are set to rise by an average of around 21 per cent over the next five years.

The fine now means that performance penalties applied to UK water companies have totalled more than £430m since 2020.

The regulator also warned that firms were continuing to fall "further behind on key targets", highlighting that nine out of 11 suppliers had experienced an increase in "pollution incidents" over the course of 2023.

Following the penalty, Ofwat CEO, David 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.

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"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," he said.

"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.”