England and Wales water regulator Ofwat hands out financial penalties to 11 firms for missing supply, biodiversity, pollution and sewer flooding goals.

Overall, for those 11 companies, almost £150m is planned to be taken off customers’ bills in the next financial year because of missed targets Ofwat has announced.

Ofwat went on to say that ‘not all water companies have significantly missed their targets. Better performers such as Severn Trent Water have exceeded their targets in areas like biodiversity and are able to recover more money from customers, whereas poorer performing companies such as Thames Water and Southern Water face a financial hit because of missed targets on water treatment works compliance, pollution incidents and internal sewer flooding across 2021/22 and will have to reduce customer bills accordingly. These decisions will impact customer bills in 2023-24.

These yearly targets, called performance commitments, are a combination of shared targets across the sector and bespoke individual targets on a wide range of issues. The automatic payments and financial penalties announced today are based on whether companies have hit their targets and are known as outcome delivery incentives.’

Ofwat CEO David Black warned that too many water companies were “falling short” when it came to delivering for their customers. “We expect companies to improve their performance every year; where they fail to do so, we will hold them to account,” he said. “The poorest performers, Southern Water and Thames Water, will have to return almost £80m to their customers. All water companies need to earn back the trust of customers and the public and we will continue to challenge the sector to improve.”

The penalties come just a few months after the Environment Agency said water company bosses should be jailed for serious pollution, noting the scale of environmental breaches within the sector today meant that existing attempts of enforcement were not working.

In an environmental performance assessment of water companies, the Agency gave one-star ratings to Southern Water and South West Water and two star ratings to Anglian Water, Thames Water, Wessex Water and Yorkshire Water.

Penalties to be paid by water companies:

Affinity Water £0.8m; Anglian Water £8.5m; Dŵr Cymru £8m; Hafren Dyfrdwy £0.4m; Northumbrian Water £20.3m; SES Water £0.3m; South East Water £3.2m; South West Water £13.3m; Southern Water £28.3m Thames Water £51.0m; Yorkshire Water £15.2m. 

Bill increases allowed for companies that met targets:

Bristol Water £0.6m; Portsmouth Water £0.8m; Severn Trent Water £62.9m; South Staffs Water £3.0m; United Utilities £24.1m; Wessex Water £4.4m.

This story was covered in BusinessGreen [paywall] and the Guardian. The news release from Ofwat can be read here.