The Water Services Regulation Authority for England and Wales (Ofwat) says customers must be paid back £114 million (CDN $187.6 million) after a new water company performance report shows utilities lagging in areas such as pollution prevention, customer service, and leakage.
The Ofwat rebate will come off customers’ bills next year after only five out of 17 water companies that Ofwat oversees achieved their targets.
The rebate follows an assessment of performance against utilities’ targets set for 2022 – 2023. The assessment evaluated utility performance in terms of whether it was “leading,” “average,” or “lagging.” However, the report listed no companies in the “leading” category.
The report found that fewer than half of the companies met performance commitment levels for pollution reduction, and most companies reported an increase in annual leakage heading into 2023.
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“The targets we set for companies were designed to be stretching – to drive improvements for customers and the environment,” announced Ofwat CEO David Black, in a statement. “However, our latest report shows they are falling short, leading to £114m being returned to customers through bill reductions. While that may be welcome to billpayers, it is very disappointing news for all who want to see the sector do better,” added Black.
If companies had performed better than their targets, Ofwat said that customers could have seen an increase on water bills.
Other findings in the Ofwat report note that trust in water companies is decreasing. Nearly half of customers believe water companies put the interests of stakeholders and owners first.
“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,” added Black.
While the report found that companies’ internal sewer flooding incidents reduced over 2022-2023, it also determined that more than half of the companies underspent their enhancement allowances, and essentially delayed anticipated improvements.
Ofwat says it is currently investigating 11 water and wastewater companies under its authority. Additionally, there are ongoing enforcement cases against six companies for potential failures on sewage discharges into the environment.
Our Chief Executive, David Black, comments on today’s announcement.
— Ofwat (@Ofwat) September 26, 2023
Some U.K. Members of Parliament have been critical of Ofwat in recent months. MPs such as Sir Robert Goodwill have suggested the regulator has been too quiet on Thames Water’s difficulties servicing its debts of £14 billion, as well as the millions in fines levied against the utility for sewage overflows.
Goodwill called the regulator “asleep at the wheel.”
Another major utility, Southern Water, has also struggled with mounting debt that saw its credit rating downgraded in July.