Investments fail to flow from water companies, reveals Ofwat
Water and wastewater companies are falling behind on their investment plans leaving promised service improvements behind schedule or undelivered, according to Ofwat.
The industry’s watchdog revealed 14 companies underspent their budget on improving their water network and eight companies underspent their budget for improving their wastewater network between 2020 and 2022.
Ofwat sets allowances for how much companies can invest over the price control period, to maintain and improve its water network, as part of its price review process which runs from 2020 to 2025.
Affinity Water and Northumbrian Water spent just 47 per cent and 48 per cent of their water enhancement allowance respectively, and Yorkshire Water and South West Water spent just 20 per cent and 39 per cent of their wastewater enhancement allowance respectively.
The main areas of underspend across both categories include drought resilience, improvements to sewage treatment works, improvements to storm tank capacity and reducing spill frequency.
Ofwat on course to publish industry report
The findings will be included in its yearly Water Company Performance report, with the latest data expected to be published this week on 8 December 2022.
Chief executive David Black criticised water companies for failing to “service improvements they were funded to deliver.”
He said: “No ifs, no buts. The lack of investment from companies we’re seeing at the moment is extremely disappointing, especially in light of the poor performance for customers and the environment. Failure to invest or delays to investments means that vital improvements are not being made or are late.
“I am expecting these companies to get a grip on their investment programme and make up for the shortfalls to deliver the associated improvements in service.”
Ofwat has recently imposed enforcement action against some of the country’s largest water firms.
In 2019, Ofwat demanded Southern Water overhauled its management, which was made to pay £126m in penalties and refunds to customers following serious failures in the operation of its sewage treatment sites, and for deliberately misreporting its performance.
It also pushed Yorkshire Water into recovering two loans that it had made to other companies within its wider company group, totalling around £940m.
The regulator is currently grappling with sewage overflows and discharges, and has slapped six water companies with enforcement cases.
It also teamed up with the Environmental Agency to announce investigations into all water and wastewater companies last November.
When approached for comment, an Affinity Water spokesperson said: “We are half-way through of our five-year investment cycle to 2025, where we have spent just under half of the planned five-year investment. Rest assured, we will spend all of the planned investment for the remaining years of this five year cycle. These investments are already having a positive impact on the service we provide and the communities we serve.
A spokesperson from Yorkshire Water added: “The latest performance report covers just two years of the current five-year period, where we have devoted time to designing better environmental catchment solutions than the traditional engineered solutions that will improve the environment while providing the best value for our customers.
“In the coming years, these solutions will be implemented and our investment will be achieved by the end of 2025, as agreed with Ofwat.”
A spokesman for South West Water, said: “This data does not include investment on base maintenance and operating cost, both of which are relevant in delivering our business plan and meeting our commitments.
“For the first two years of the period, our total spend, including base maintenance, enhancement and operating costs, was circa 99 per cent of the allowance. It is a limited snapshot covering only the first two years of the investment period and a small amount of the areas we are investing in.”
City A.M. also approached Northumbrian Water for comment.