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Water Companies Compelled to Reimburse Customers Due to Subpar Performance


Water companies have been directed by the industry regulator, Ofwat, to reimburse £114 million to customers in the form of reduced bills due to their failure to meet key performance targets. The underperformance primarily pertains to criteria related to water leakage, supply, and pollution reduction. Following a review, households will benefit from lower bills as millions of pounds are returned to them.

In Ofwat's evaluation, no water company achieved the highest level of performance. Seven companies, namely Dŵr Cymru, Southern, Thames, Anglian, Bristol, South East, and Yorkshire Water, were classified as "lagging," while the remaining ten were deemed "average," with none considered as "leading."

The regulator assesses water companies in England and Wales against challenging targets established in 2019 for a five-year period. If they fail to meet these targets, Ofwat limits the amount they can charge customers. Most of the reviewed water providers will have to reduce bills in 2024-25, rather than issuing lump-sum refunds to individual bill payers.

The companies required to lower bills are Affinity Water, Anglian Water, Dŵr Cymru, Hafren Dyfrdwy, Northumbrian Water, SES Water, South East Water, South West Water (South West area), South West Water (Bristol area), Southern Water, Thames Water, and Yorkshire Water. The exact reduction amount per customer remains provisional and depends on location and inflation.

Ofwat's CEO, David Black, expressed disappointment over the performance, acknowledging that while bill reductions might be welcomed by customers, it's unfortunate for those wanting to see improvements in the sector. The regulator also noted a decline in customer satisfaction.

Water UK, the industry body, acknowledged that there's still much work to be done to meet the tightening regulatory targets. Thames Water and Southern Water are the companies facing the largest reimbursements, with Thames Water having to return over £101 million.

Some companies were permitted to charge more for improving their performance, offsetting the overall reimbursement. The £114 million being returned to customers also accounts for this adjustment. Ofwat is currently investigating all 11 water and wastewater companies, with six facing potential enforcement cases regarding sewage discharges into the environment.

Environment Secretary Therese Coffey expressed disappointment in Ofwat's report, emphasizing that no water company achieving a "leading" classification is unacceptable. She stated that despite the complexity and pressure on water and sewerage systems, there is no excuse for underperformance. The Department for Environment, Food, and Rural Affairs announced additional funding to reduce sewage overflows, supplementing the £56 billion allocated last year with an additional £4 billion.