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Water companies in England and Wales have been ordered to repay £158m to customers through lower bills following the missing of key targets on pollution and leaks. This marks the fourth consecutive year that firms have had to compensate customers, posing questions regarding the effectiveness of the regulator. The majority of customers will see bills fall by under £10, with Thames Water making the largest repayment of £56.8m despite having improved its performance overall from the previous year.
Ofwat holds the largest 17 water and wastewater companies in England and Wales responsible each year for achieving key targets such as sewer flooding, supply interruptions and water leaks. This year, no company managed to gain the top rating for the second consecutive year, although four saw improvements from the previous year. For the worst offenders, the failure to meet targets means having to give £157.6m back to customers via their bills for 2025-2026.
Ofwat CEO David Black opined that “Companies must implement actions now to improve performance… and not wait till government or regulators ask them to act,” adding that it was evident companies must change by addressing issues regarding culture and leadership. Furthermore, despite the repayment to customers, most will not see a significant change in their bills, and this will be dwarfed by the anticipated long-term increase of £94 per household over the next five years that Ofwat is proposing. The water companies maintain that even higher bills will be required to undertake the infrastructure improvements demanded by the report on performance.
The NHS and other leading organisations have warned that climate change will cause critical water shortages in England within just two decades. Already, a fifth of all water put into the network in England and Wales is lost via leaks. The findings of the report have raised doubts on whether Ofwat is a viable regulator or not. James Wallace, CEO of campaign group River Action, questioned the authority of Ofwat, noting that companies had continued to under-perform for four years in a row
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