Water companies forced to cut bills by £150m after missing sewage and flooding targets

Thames Water - Andrew Matthews/PA Wire
Thames Water - Andrew Matthews/PA Wire

Water companies will be forced to cut their bills by £150 million next year after missing targets on sewage pollution and flooding people’s homes, the regulator said.

Eleven out of 17 water companies will have to return money to customers because of missed targets.

Southern Water and Thames Water were singled out as the worst performers, and will have to cut bills by £28m and £51m respectively because of pollution incidents and sewers flooding into customers’ homes.

This will save Southern customers around £6 on their annual bills in 2023-24 and Thames customers around £3.40.

Ofwat - which sets targets for the sector and oversees how much water companies can charge their customers - said average bills were also likely to rise next year to reflect inflation.

The regulator has been criticised in recent weeks for not doing enough to stop water companies releasing sewage into rivers and the sea, or cracking down on leaks.

'We will hold them to account'

"We expect companies to improve their performance every year; where they fail to do so, we will hold them to account," said David Black, the chief executive of Ofwat.

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

Southern Water was penalised in particular for its record on sewage pollution and flooding, the regulator said.

The water company has been labelled the "biggest offender" on pollution and was last year separately fined £90m over the release of raw sewage into protected waters after a criminal investigation by the Environment Agency.

Thames Water was singled out by Ofwat for customer satisfaction, which is measured by complaints to the company and a survey by the regulator.

The water company angered customers earlier this year when they imposed a hosepipe ban, while maintaining the worst record on leaks in its own network.

It was also criticised for carrying out maintenance on a back-up water plant during the worst drought for southern England since 1976.

Some better performers, including Severn Trent, will be able to raise their bills because of good performance in areas such as biodiversity.

Severn Trent will be able to raise bills by £63 million, an average of £13 for its 4.6 million customers.

Mike Keil, from the Consumer Council for Water, said: "The scale of these penalties reflects the extent to which too many water companies have failed to deliver on promises made to their customers and it’s right households are reimbursed."

On Monday, Defra confirmed a change announced in The Telegraph on Saturday that water companies that seriously breach rules by dumping sewage in rivers and seas would face fines increased by 1,000-fold to £250 million.

Ranil Jayawardena, the Environment Secretary, stated that he had been "clear that if water companies don't do what is expected, there will be consequences".

He added that bigger financial penalties would act as a deterrent and "push water companies to do more, and faster, when it comes to investing in infrastructure and improving the quality of our water".

He said that the increase sent a clear signal that the duty fell on water companies to deliver clean rivers and coastlines, while "the polluter must pay".