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Thames Water told to cut millions from customers’ bills after fine

Almost £150 million is set to be taken off customers’ water bills after 11 water companies have been hit by financial penalties (Rui Vieira) (PA Archive)
Almost £150 million is set to be taken off customers’ water bills after 11 water companies have been hit by financial penalties (Rui Vieira) (PA Archive)

Households are to see almost £150 million taken off their water bills after 11 water suppliers have been hit by fines, regulator Ofwat has announced.

Ofwat said that the utility companies have been fined for missing targets in areas such as water supply interruptions, pollution incidents and internal sewer flooding.

Thames Water and Southern Water performed the worst and will have to return almost £80 million to customers, Ofwat said.

But other companies which exceeded their targets will be able to recover more money from customers, meaning they could see their bills go up.

Severn Trent Water, which supplies millions of people with water across England, performed particularly well in the regulator’s review and will be able to increase customer payments by £63 million in the year ahead.

However, Ofwat noted that all the water companies will be permitted to increase charges in line with inflation, using the consumer prices index including owner occupiers’ housing costs (CPIH) – which hit 8.6 per cent in the 12 months to August.

This means that some reductions could be offset by inflation-linked price rises in customers’ bills.

David Black, the chief executive of Ofwat for England and Wales, said: “When it comes to delivering for their customers, too many water companies are falling short, and we are requiring them to return around £150 million 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 £80 million 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.”

Ofwat’s review comes amid greater scrutiny of water companies during a period of drought and with some areas of the country facing hosepipe bans during the summer heatwaves.

Mr Black said in August that targets for areas such as leaks are “challenging but achievable”, revealing that he did have concerns about the performance of some companies.

The yearly targets were set at the regulator’s last price review in 2019 and will be in place up until the next review in 2025.

Customers should see their bills reduced in 2023 to 2024.