Water firms told to return £158m to customers after missing targets on pollution and leaks

Water companies have been ordered to return £158million to customers via lower bills next year after missing key targets on issues like pollution and leaks.

Industry regulator Ofwat announced the rebate following its annual review of water and wastewater companies’ performance in England and Wales.

Ofwat said customer bills will be reduced in 2025-26 to reflect the penalties, with the total rebates calculated in December.

Targets missed: Industry regulator Ofwat has ordered water companies to return £158m to customers via lower bills next year

But the fines are only likely to reduce bills by around £2 a year at most as any reduction will be cancelled out by an average rise in water bills of around £94 across England and Wales across the next five years. 

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’ and the remaining ten were rated ‘average’.

Ofwat judges the performance of water companies each year against the ‘stretching’ targets they set in 2019 for a five-year period until 2025.

If they fail to meet these, the watchdog restricts the amount of money they can take from customers.

Ofwat said the figures are provisional until it completes a review process.

Water companies reduced pollution incidents by just 2 per cent – compared to a target of 30 per cent. 

Thames Water moved up a category from ‘lagging’ to ‘average’ as it met some performance targets on leakage and supply interruptions.

Despite this, the heavily indebted London water provider will have to pay £56.8million, the biggest fine for the fourth straight year. 

Anglian Water’s fine is £38.1million, Yorkshire Water’s is £36million and Southern Water’s is £31.9million. Household bills are unlikely to go down by much.

The biggest penalty, of £56.8million for Thames Water, will only equate to a couple of pounds off each customer’s bill, which is expected to go up by £99 over the next five years. 

David Black, chief executive of Ofwat, said: ‘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.’

Labour has proposed laws which could see bosses jailed for up to two years if they obstruct regulators.

Environment Secretary Steve Reed said the Government would carry out a full review of the sector.

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.

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