UK water companies ordered to cut £150mn from customers’ bills

Eleven water companies in England and Wales have been told to cut almost £150mn off customers’ bills next year because they missed targets on key measures such as water supply interruptions, pollution and internal sewer flooding.

Southern Water and Thames Water were singled out by the regulator Ofwat as the poorest performers and will have to return almost £80mn to their customers. Severn Trent was highlighted as the best performer and so will be able to increase customer payments by £63mn in the year ahead.

Companies can appeal against the recommendations and the regulator will make a final decision by the end of the year.

The penalties come as Ofwat attempts to restore trust in the industry, which has faced the biggest wave of protests since privatisation more than 30 years ago due to untreated sewage pouring into rivers and coastal waterways near popular beaches.

Several companies are being investigated by the Environment Agency for “significant and widespread breaches” of permits that allow a certain amount of raw effluent and storm water to flow into the nation’s waterways.

“When it comes to delivering for their customers, too many water companies are falling short,” said David Black, Ofwat chief executive. “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 regulator noted that customer bills are expected to increase sharply in line with CPIH inflation, including owner occupiers’ housing costs, which hit 8.6 per cent in the 12 months to August.

Ofwat said it was urging companies to pilot new ways to help vulnerable households, including seasonal charging to help lower water bills in the winter when energy costs are higher. The rise is expected to be announced in January.

Mike Keil, senior director of policy, research and campaigns at the Consumer Council for Water, said the penalties would “help to ensure bills do not rise as much as anticipated next April for some customers, but it won’t be enough to cushion the blow for the one in 10 households that already say their water bill is unaffordable”.

Customers’ bills are set on a flat standard amount based on their type of property, or on a rate based on their usage. The average annual water bill is about £419 in 2022.

Companies are concerned that the risk of non-payment is increasing, especially as they are prevented by law from turning off supplies. Last year the singer Bob Geldof backed a campaign for non-payment at Southern Water.

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