Water companies in England and Wales will return £157.6 million to customers after failing to meet performance targets.
The reductions in bills will take effect in 2025-26, following calculations based on companies’ performance during the 2023-24 period.
The announcement came as part of Ofwat‘s annual performance report, which highlighted that companies are lagging behind on pollution reduction and internal sewer flooding targets.
Despite commitments to reduce pollution incidents by 30% between 2020 and 2025, the sector has only achieved a 2% reduction so far.
In 2023, nine out of eleven water companies reported an increase in pollution incidents, with only one company meeting its performance commitment level.
In contrast, nearly half of the companies achieved their targets in 2022, and four exceeded them by over 10%.
Regarding leakage, companies have recorded a 6% annual reduction so far, falling short of the 16% target set for 2025.
The goal for reducing internal sewer flooding incidents is a 41% decrease over five years, but only a 10% reduction has been realised after four years.
Additionally, customer satisfaction has declined, reaching its lowest level since Ofwat began tracking this metric in 2020.
Ofwat Chief Executive Officer, David Black said: “This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.
“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.
“Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the government or regulators tell them to act.
“As we look towards the next price control, the challenge for water companies is to match the investment with the changes in company culture and performance that are essential to deliver lasting change.”
