Water firms to be forced to increase customer compensation for failures
UK water companies will be forced significantly to increase compensation payments for customers impacted by service failures including sewer flooding, supply outages and low water pressure.
Compensation for internal flooding from sewers could more than double from the current £1,000 benchmark, while those hit by water pressure issues could receive ten times the payout, the Department for Environment, Food and Rural Affairs (Defra) said in a statement.
The number of situations that could trigger compensation will also be expanded to include scenarios in which so-called ‘boiled water’ notices are issued, or companies fail to check meter readings or installations in time.
There is currently no statutory requirement to pay compensation to customers when supply interruptions occur, although some voluntarily offer payouts at varying rates.
The government’s intervention comes after a series of outages earlier in May left tens of thousands of homes in Brixham without clean drinking water.
The incident, which stemmed from the emergence of the parasite cryptosporidium in the local water supply, caused an outbreak of illness in the South Devon town. Those customers would now be entitled to receive at least £10 per 24 hours, potentially amounting to more than £500 given the incident lasted over eight weeks.
In South Staffordshire last month, a burst water main disrupted more than 9,000 homes. The new regulations would warrant payment of £150 for households and £300 for businesses impacted, Defra said.
“Customers have too often been let down by water companies, with supply cut off, low water pressure and in some cases even contaminated tap water,” Steve Reed, Secretary of State for Environment, Food and Rural Affairs, said.
“We are clear that the public deserve better compensation when things go wrong, so I’m taking action to make sure that happens.”
The announcement comes amid long-running pressure on the UK’s embattled utility sector to clean up its act, following a huge spike in sewage spills caused in part by years of under-investment in the network’s crumbling infrastructure.
Crisis-hit Thames Water, the UK’s largest water supplier, is currently battling to stave off nationalisation amid huge debts.
In an attempt to tackle the financial issues, the sector is pushing industry regulator Ofwat to hike a proposed £19 a year ceiling on water bill rises further. An announcement will be made on Thursday.
Defra said its new proposals followed “overwhelming public support,” with a recent survey showing 84 per cent of water customers and 70 per cent of businesses agreed to its proposals.
Mike Keil, chief executive of the Consumer Council for Water (CCW) said the current compensation scheme, known as the Guaranteed Standards Scheme, was “not fit fur purpose.”
“The increased payment levels when things go wrong, alongside fewer reasons for companies to avoid making payments, means that there are far greater incentives for water companies to get things right first time” he added.
“The overhaul of these standards marks a step forward in improving consumer protection and repairing fractured trust in the water sector.”