Ofwat is ordering water companies to pay £157.6 million for missing performance targets

Water companies will have to pay a £157.6m fine after missing key targets to reduce pollution, leaks and supply disruptions as customer satisfaction continues to fall, Ofwat said.

Not a single company reached the regulator’s highest category of ‘leading’, while Anglian Water, Welsh Water and Southern Water fell into the lowest category of ‘lagging’, while the remaining 10 were rated ‘average’.

Every year, Ofwat assesses the performance of water companies in England and Wales against the “stringent” targets they set in 2019 for a period of five years to 2025.

If they fail to comply, Ofwat limits the amount of money they can take from customers. Ofwat said the figures were provisional pending a review process.

Ofwat CEO David Black said: “This year’s performance report is clear evidence that money alone will not deliver the sustained improvements that customers rightly expect.”

“It is clear that companies need to change, and that must start with addressing issues of culture and leadership. Too often we hear that the weather, third parties or external factors are blamed for defects.

“Companies need to take action now to improve their performance, be more dynamic and agile and be at the forefront of problems. And don’t wait for the government or regulators to tell you to act.

“Looking ahead to the next price control, the challenge for water companies is to balance investment with the changes in corporate culture and performance that are essential for lasting change.”

Thames Water moved up to average in the lagging category as it met some performance targets relating to leaks and supply interruptions.

The penalties are separate from an ongoing Ofwat investigation into all 11 water companies in England and Wales, which ordered three companies to pay £168 million in fines following initial investigation findings in August.

This comes amid growing public and political anger over the privatized water sector, which is under fire over sewage spills, proposed legislative increases and executive bonuses.

Years of underinvestment by privately owned companies, combined with aging water infrastructure, a growing population and more extreme weather caused by climate change, have resulted in the quality of England’s rivers, lakes and oceans plummeting in recent years.

Some water utilities also suffer from high levels of debt or are criticized for dividends to shareholders and bonuses for executives.

Labor has said it wants the sector to reduce oil spills and has even proposed sweeping new laws that could see bosses face up to two years in prison if they obstruct regulators.

On Monday, a report from the Environment Agency found that almost a fifth of water supplies are lost through leaks before they reach customers’ taps.

Ofwat said customers’ bills will be reduced to reflect the penalties, but total refunds will be calculated in December.