Water bills will be reduced with businesses having to pay £157m

Ofwat said problems persisted while customer satisfaction with water companies continued to decline.

In an annual performance report on water companies, Ofwat said customer bills will be reduced in 2025-2026 to reflect the penalties, with full rebates calculated in December.

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.”

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.