Ofwat orders water firms to pay £157.6m for missing performance targets
Water companies will have to pay a £157.6m penalty after missing key targets on reducing pollution, leaks and supply interruptions while customer satisfaction continues to fall, Ofwat has said.
Not one company achieved the regulator’s top category of “leading” while Anglian Water, Welsh Water and Southern Water fell into the lowest category of “lagging” while the remaining 10 were rated “average”.
Ofwat judges the performance of water companies in England and Wales each year against the “stretching” targets they set in 2019 for a five-year period until 2025.
If they fail to meet these, Ofwat restricts the amount of money they can take from customers. Ofwat said the figures are provisional until it completes a review process.
David Black, chief executive of Ofwat, said: “This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.
“It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings.
“Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the Government or regulators tell them to act.
“As we look towards the next price control, the challenge for water companies is to match the investment with the changes in company culture and performance that are essential to deliver lasting change.”
Thames Water moved up a category from “lagging” to “average” as it met some performance targets on leakage and supply interruptions.
The penalties are separate to an ongoing Ofwat investigation into all 11 of England and Wales’s water firms, which ordered three companies to pay £168 million in fines in August, in the first results of the probe.
It comes against a backdrop of mounting public and political fury at the privatised water sector which is under fire over sewage spills, proposed bill rises and executive bonuses.
Years of under-investment by the privately-run firms combined with ageing water infrastructure, a growing population and more extreme weather caused by climate change have seen the quality of England’s rivers, lakes and oceans plummet in recent years.
Some water utilities are also creaking under high levels of debt or face criticism over dividends to shareholders and executive bonuses.
Labour has said it wants the sector to reduce spills and has even proposed sweeping new laws which could see bosses face up to two years in jail if they obstruct regulators.
On Monday, a report from the Environment Agency found that almost a fifth of water supplies are being lost through leaks before they reach customers’ taps.
Ofwat said customer bills will be reduced to reflect the penalties, but that the total rebates will be calculated in December.
By Alex Daniel, PA Business Reporter