In this review, we have looked at the environmental incentives that water and wastewater companies offer, both as part of their charges for developer services and more widely, to support better environmental choices. We have also looked at a range of other ways that water companies have used the charges they set to influence and incentivise their customers towards environmentally beneficial behaviours. These examples showcase the wide range of methods by which charges can be used to incentivise customers towards particular behaviours.
Tables 1 and 2 summarise companies’ environmental incentives that are currently offered by for developer services.
Table 1: Discounts for improving water efficiency – 2022-23 charging arrangements
| Company | Water infrastructure charge 2022-23 (£ per connection) | Criteria for water efficiency discount – Achieving estimated usage of a certain level in litres per person per day (l/p/d) | Water efficiency discount (applied to infrastructure charge) – £ per qualified property |
| Anglian Water | 293 | N/A | N/A |
| Hafren Dyfrdwy | 411 | N/A | N/A |
| Northumbrian Water | 130 | 105 | 130 |
| Severn Trent | 363 | 100 | 280 |
| Southern Water | 0 | 110 | 230 |
| South West Water | 96 | N/A | N/A |
| Thames Water | 445 | Tiered discount: i) achieve 110 l/p/d; ii) discount for rainwater harvesting and grey water recycling; iii) water neutrality | Tiered discount offering: i) £200; ii) £1,000; and iii) £1,800 |
| United Utilities | 302 | 100 | 272 |
| Dŵr Cymru | 428 | N/A | N/A |
| Wessex Water | 199 | N/A | N/A |
| Yorkshire Water | 80 | 125 | The percentage discount will be equal to the percentage that the estimated water usage is below 125 l/p/d |
| Affinity Water | 366 | 110 | 84 |
| Bristol Water | 309 | 110 | 75% discount trial for selected developments |
| Portsmouth Water | 321 | 100 | 50% discount |
| South East Water | 633 | Discount offered for a smaller diameter connection (20mm instead of 25mm) | £50 |
| South Staffs Water | 305 | 100 | 40% reduction |
| Sutton and East Surrey Water | 312 | It offers a 15% reduction to infrastructure charges if bathroom fittings are A-rated OR grey water recycling or rain water harvesting it fitted. If both these conditions are met the reduction is 30% | |
Table 2: Discounts for sustainable surface water drainage – 2022-23 charging arrangements
| Company | Sewerage infrastructure charge 2022-23 (£) | Criteria for sustainable drainage/surface water reduction discount | Efficiency discount (applied to sewerage infrastructure charge) – £ per qualified property |
| Anglian Water | 490 | N/A | N/A |
| Hafren Dyfrdwy | 411 | N/A | N/A |
| Northumbrian Water | 95 | Discount for no surface water draining into public sewer | 95 |
| Severn Trent | 295 | Discount for no surface water draining into public sewer | 124 |
| Southern Water | 608 | N/A | N/A |
| South West Water | 707 | N/A | N/A |
| Thames Water | 320 | SuDS to remove surface water runoff by 95% or ensuring no surface water enters the network | 25 |
| United Utilities | 279 | Discount for no surface water draining into public sewer | 251 |
| Dŵr Cymru | 428 | Discount for no surface water draining into public sewer or for removing surface water from an alternative site/area that is connected to the same network in the vicinity of the new development | 100 |
| Wessex Water | 664 | Discount for approved SuDS and no surface water draining into public sewer | 332
598 |
| Yorkshire Water | 220 | Exemption from surface water infrastructure charge (£160) if the final destination of the surface water for the proposed development is a watercourse or soakaway | 160 |
Building regulations require new homes to have estimated usage of less than 125 litres per person per day (l/p/d), or 110 l/p/d in some areas. Northumbrian Water, Severn Trent, Thames Water, United Utilities, Portsmouth Water and South Staffs Water appear to be the only companies that offer incentives for developers to build homes that consume less water, beyond that required by these building regulations.
We have also highlighted some examples of good practices by water companies in promoting and incentivising better environmental outcomes. These include:
- Clear promotion of environmental incentives on water company websites;
- Incentives for water recycling and water neutrality;
- Winners of Ofwat’s Water Breakthrough Challenge looking to deliver water neutrality at new appointee sites:
- Enabling water smart communities;
- Using partnership working to deliver sustainable drainage solutions;
- Using wholesale charges to Incentivise water efficiency in the water retail market; and
- Avoiding perverse incentives in bulk supply charging.
We are pleased to see that this year some companies have worked to launch or improve the environmental incentives they provide. However, it is clear from our review that much more can be done, with many companies not offering effective incentives or not appearing to communicate them effectively. We will therefore be engaging with industry over the coming year on both the environmental incentives they can offer and on how we regulate environmental incentives for developer services from April 2025.