Water firms forced to pay back customers for poor performance

by | Sep 26, 2023 | Climate Change

Getty ImagesBy Lora JonesBusiness reporterWater companies have been ordered to pay back £114m to customers through lower bills after missing key targets.Ofwat, the industry regulator, said that firms are “falling short” on performance measures around leakages, supply and reducing pollution.It said that following a review, millions of pounds would be returned to households by cutting bills. Ofwat said in its assessment that not one company reached the highest measure of performance. Dŵr Cymru, Southern, Thames, Anglian, Bristol, South East and Yorkshire Water fell into the lowest category of “lagging” and the remaining 10 were rated “average”. None were considered “leading”.The regulator judges water companies in England and Wales against “stretching” targets set in 2019 for a five-year period.If they fail to meet targets, Ofwat restricts the cash that they can take from customers.All but five of the water providers reviewed will have to give money back to customers by reducing their bills in 2024-25, rather than each bill payer getting a lump sum refund.The companies that will have to cut bills are:Affinity WaterAnglian WaterDŵr CymruHafren DyfrdwyNorthumbrian WaterSES WaterSouth East WaterSouth West Water (South West area)South West Water (Bristol area)Southern WaterThames WaterYorkshire Water It is not yet possible to say how much each customer might see their bill reduced by, as the figures are provisional and will depend on where they live and inflation. Customers at other companies might see their bills go up. Any changes will be applied automatically although it may not show up as a separate line on bills.Ofwat chief executive David Black said that while any reductions “may be welcome to bill payers, it is very disappointing news for all who want to see the sector do better”.The regulator also found that customer satisfaction has been falling.”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,” Mr Black said.Water UK, the industry body, said that companies recognised there was “still much more to do to meet the regulator’s ever-tightening targets”.Listen to BBC Radio 4’s The Bottom Line: What next for water?Thames Water must return the most money – more than £101m – followed by Southern Water, which must pay out £43m. Thames Water serves 15 million people with water and wastewater and has been struggling under a huge debt pile.Shareholders agreed to provide an extra £750m in funding in July as it fought off the threat of government control and faced criticism over sewage discharges and leaks.”We’re making progress and we’ll continue to engage and work with Ofwat as we implement our plan,” a Thames Water spokesperson said. The total amount the industry must pay out has been offset by a few companies being allowed to charge more for improving their performances.The £114m being returned to customers takes into account the fact that some companies, including Severn Trent and United Utilities, will be allowed to charge their customers more in the next financial year, having delivered a sufficient service.Severn Trent Water will be allowed to charge £88m more across all of the 4.6 million households and businesses it serves, while United Utilities will be able to charge an extra £25m.Ofwat said it was investigating all 11 water and wastewater companies and there were live enforcement cases for six of t …

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