Ofwat has issued a damning report on the performance of water companies in England and Wales, warning that poor performance has become 'the norm' for some firms. The regulator highlighted serious pollution, poor service, and weak financial management as embedded issues, naming Northumbrian Water, Southern Water, South West Water, Thames Water, Welsh Water, and Yorkshire Water as lagging behind.
The report noted that serious pollution incidents increased in 2021-22, and only four companies met the performance level to reduce sewage flooding in customers' homes. Ofwat is requiring the worst performers, including Thames Water and Southern Water, to return around £120 million to customers. The regulator also criticised companies for failing to clearly explain the link between dividends and performance for customers.
Ofwat analysed financial resilience after a year in which three companies were forced to inject capital. Northumbrian Water paid £181.5 million in dividends, and Portsmouth Water paid £5.1 million, both significantly higher than the regulator's expectations. The Guardian revealed that the nine main water and sewerage companies paid out £65.9 billion in dividends over the last three decades and took on debts of £54 billion.
David Black, chief executive of Ofwat, said: 'In too many areas, water and wastewater companies are falling short when it comes to looking after customers, the environment and their own financial resilience. We are clear; these companies need to address this unacceptable performance as a matter of urgency.'
Despite some improvements on leakage, Ofwat said more needs to be done to reduce leaks by 50% by 2050 from 2017-18 levels. The regulator also highlighted that companies are not investing enough in treatment plants to reduce sewage discharges and improve drought resilience. All water companies are under investigation for potentially illegal sewage discharges.
