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Water bills slashed by £150m next year

Rebecca Goodman
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Rebecca Goodman

Millions of households across the country will see their water bill reduced next year, after the regulator fined 11 firms over missed targets.

The 11 UK water companies have been ordered to return almost £150m to customers after regulator Ofwat found they had missed targets.

Companies including Thames Water, Southern Water, and Northumbrian Water will lower bills during the 2023/24 financial year.

Ofwat said that while the majority of companies had missed their targets – 11 of 17 UK water companies – the level to which they missed them varied.

Thames Water and Southern Water missed targets on water treatment works compliance, pollution incidents and internal sewer flooding during 2021/22. They will pay back £51m and £28m respectively to customers.

Northumbrian Water will return £20.3m, South West Water, £13.3m, and Yorkshire Water £15.2m.

The targets, known as outcome delivery incentives, are set on a yearly basis and are in place until 2025, when the next price review will take place into the water market. They were set in 2019 at the last price review.

Some customer bills will rise

Most water companies will need to return money to customers but some can increase bills because they have exceeded their targets.

Severn Trent Water will be able to recoup £62m from customers, United Utilities £24.1m, and Wessex Water £4.4m.

David Black, Ofwat CEO, said: “When it comes to delivering for their customers, too many water companies are falling short, and we are requiring them to return around £150m to their customers.

“We expect companies to improve their performance every year; where they fail to do so, we will hold them to account. 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.”

‘Too many water companies have failed to deliver’

Mike Keil, senior director of policy, research and campaigns at the Consumer Council for Water (CCW), said: “The scale of these penalties reflects the extent to which too many water companies have failed to deliver on promises made to their customers and it’s right households are reimbursed.

“This will 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 ten households that already say their water bill is unaffordable.

“We urgently need a new water affordability scheme to end the current postcode lottery of financial assistance for customers in hardship.”

In the summer, Ofwat announced proposals to take enforcement action against companies that fail to link dividend payments to their performance.