REG - Water Services Auth - 11 water companies to reduce bills

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03/10/2022 08:15

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RNS Number : 4491B  Water Services Regulation Authority  03 October 2022

11 water companies to reduce bills by almost £150m because of missed targets

 

Most water companies will be hit by financial penalties because of missed
targets, the regulator Ofwat announced today.

 

Overall, for those 11 companies, almost £150m is planned to be taken off
customers' bills in the next financial year because of missed targets on areas
such as water supply interruptions, pollution incidents and internal sewer
flooding.

 

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. They were set in 2019 at the last price review. These are in
place up until 2025, when the next price review, PR24, will come into place.
The automatic payments and financial penalties announced today are based on
whether companies have hit their targets and are known as outcome delivery
incentives.

 

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."

 

 

                     Draft decision on payments (£m)
 Affinity Water      -0.8
 Anglian Water       -8.5
 Bristol Water       0.6
 Dŵr Cymru           -8
 Hafren Dyfrdwy      -0.4
 Northumbrian Water  -20.3
 Portsmouth Water    0.8
 SES Water           -0.3
 Severn Trent Water  62.9
 South East Water    -3.2
 South Staffs Water  3.0
 South West Water    -13.3
 Southern Water      -28.3
 Thames Water        -51.0
 United Utilities    24.1
 Wessex Water        4.4
 Yorkshire Water     -15.2
 TOTAL               -53.4

 

 

We analyse and compare water company performance in depth through publications
such as our Service Delivery Report and Financial Monitoring Report, both of
which are due to be published before the end of 2022.

 

These draft decisions are now out for consultation and can be viewed on the
Ofwat website. The consultation closes on 21 October 2022.

 

//ENDS//

 

Notes to editors

 

·    We welcome any responses to this consultation. Please email them to
in-periodODIs@ofwat.gov.uk. The closing date for this consultation is 21
October 2022.

·    All the documents for the in-period draft determinations can be found
on our website,
(https://www.ofwat.gov.uk/regulated-companies/price-review/in-period-odi-determinations/in-period-determinations-for-2021-22/)
including the sector overview document
(https://www.ofwat.gov.uk/consultation/sector-overview-draft-determinations-of-in-period-outcome-delivery-incentives-2021-22)
.

·    Our 2019 price control determinations set the price and service
packages that companies have to deliver through to 2025. The outcome delivery
incentives (ODIs) are the financial or reputational consequences for companies
of outperformance or underperformance against their performance commitments.
The majority of performance commitments are reviewed annually so the financial
consequences happen close in time to company performance and customer
experience.  The payments will affect the amount of revenue companies can
recover from customers through 2023-24 bills.

·    Last month, Ofwat published the leaderboard
(https://www.ofwat.gov.uk/latest-water-and-wastewater-service-rankings-shows-fall-in-customer-service-levels/)
for customer satisfaction and experience for water and wastewater companies
(C-MeX) in 2021-22, alongside the leaderboard showing the experience for
developer services customers (D-MeX).

·    Ofwat published provisional figures on leakage in July
(https://www.ofwat.gov.uk/ofwat-reveals-progress-on-water-industry-leakage-performance/)
, showing progress industry wide and calling for more to be done.

·    Research from Ofwat and CCW, published in May, found that people who
have their homes flooded with sewage are frequently being let down by
wastewater companies. Press notice - Sewer flooding misery for customers: call
for urgent action from wastewater companies
(https://www.ofwat.gov.uk/pn-21-22-sewer-flooding-misery-for-customers-call-for-urgent-action-from-wastewater-companies/)

·    Bills will also be impacted by inflation. Water companies are allowed
to increase bills by inflation, using CPIH (the Consumer Prices Index
including owner occupiers' housing costs). We have called on companies to
provide more support for customers and think differently about how they charge
customers, and recently published a consultation calling for trials to help
with the cost of living
(https://www.ofwat.gov.uk/cheaper-water-bills-in-the-winter-and-other-charging-innovations-ofwat-calls-for-trials-to-help-with-cost-of-living-and-using-water-wisely/)
.

 

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