Thames Water will have to return more than £50m to its customers and Southern Water almost £30m after missing key performance targets.
This comes as Ofwat confirms the financial penalties and payments for all water companies, with the majority having to return money to customers because of missed targets.
The worst performing companies, Thames Water and Southern Water, will have to return the money to customers because of missed targets on water treatment works compliance, pollution incidents and internal sewer flooding across 2021-22.
The table of final payments can be found below.
David Black, Ofwat Chief Executive, said:
“Too many water companies are failing to deliver for their customers. The poorest performers, Thames Water and Southern Water, are consistently falling beneath our expectations and those of their customers. They need to take immediate action to improve their performance and rebuild trust with the people they serve. We will continue to hold companies to account for their performance and we will make sure that they raise their game.”
|Final decision on payments (£m)|
|Severn Trent Water||101.8|
|South East Water||-2.9|
|South Staffs Water||3.0|
|South West Water||-13.3|
This follows on from the announcement of draft decisions in October, the consultation for which closed on 21 October 2022.
Notes to editors
- The links to the final decisions can be found on the Ofwat website
- On per capita consumption (PCC) we are disappointed that companies haveprovided little insight into the drivers of changes in household demand in 2021-22 and the steps they are taking to reduce it. The absence of this evidence, combined with the service failures customers experienced during 2022 driven by prolonged hot and dry weather, reinforce the need for companies to have the strongest possible incentives. Companies that don’t meet their 2024-25 performance commitment levels should expect to incur financial penalties.
- There were some changes for specific companies from the draft decisions.
- Northumbrian Water’s payment has been amended because of the severe impact from Storm Arwen, given the terms of its performance commitments, alongside clarification on how their greenhouse gases performance commitment operated and how its C-MeX score was calculated.
- Wessex Water and Portsmouth Water have asked to defer some of their outperformance payments, so that the increase in 2023-24 bills for customers is less than it otherwise would be given the current financial pressures that they are facing, while the amount of money Severn Trent are deferring has been amended. This has resulted in Wessex Water moving from a net outperformance payment to net underperformance payment, but this is because of its deferral rather than missed targets.
- We analyse and compare water company performance in depth through publications such as our Water Company Performance Report (formerly called the Service and Delivery Report) and Monitoring Financial Resilience report, both of which are due to be published before the end of 2022.
- Our 2019 price control determinations set the price and service packages that companies have to deliver through to 2025. The outcome delivery incentives (ODIs) are the financial or reputational consequences for companies of outperformance or underperformance against their performance commitments. Performance against the majority of performance commitments is reviewed annually so the financial consequences happen close in time to company performance and customer experience. The payments will affect the amount of revenue companies can recover from customers through their 2023-24 bills.