SOUTH West Water will potentially have to return millions of pounds to customers next year if they continue to underperform, regulator Ofwat has said.
The rebate, set out in Ofwat’s 2022/23 performance assessment, will come off customers’ bills for next year.
Water companies were set targets for 2020-25 to deliver better outcomes, for both customers and the environment.
Where they fall short on these, the regulator plans to limit the amount of money companies can collect from customers.
South West Water certainly isn’t the only water company to be impacted by this latest legislation, nor is its performance the worst.
Ofwat’s annual Water Company Performance Report categorises companies’ performance as either ‘leading’ ‘average’ or ‘lagging’. The parameters are set against a selection of common metrics including pollution incidents, customer service and leakage.
South West Water was among ten water companies that were rated ‘average’. This year no company has been ranked in the ‘leading’ category.
Accord to Ofwat’s estimations, South West Water may have to pay out about £12 million if their performance does not pick up.
Ofwat rated South West Water as ‘poorer than performance commitment level’ in five of their 12 categories, including pollution incidents, drinking water quality and supply interruptions.
South West Water has been picked up for its poor record in the past. In the Environment Agency’s Environmental Performance Report published earlier this year, the water company was among the lowest rated in England, although many aspects of their record were improving.
A South West Water spokesperson said: ‘We continue to deliver significant improvements in our performance, but we know there is more still to do.
‘This report is just one part of a much larger picture for our group however, it does reflect some of the improvements and progress we are making.’
Ofwat’s Water Company Performance Report has also assessed company performance for the three years since the start of the current regulatory cycle (which covers 2020-2025).
Over that time, companies have shown improvements in areas including leakage and internal sewer flooding and last year, all but one company achieved the performance level for unplanned water outages.
However, across the board, progress has been too slow. In 2022/23, fewer than half of companies achieved their performance target on reducing pollution incidents and fewer than half of the companies meeting their performance commitment on leakage.
'This performance is matched by an overall decline in customer satisfaction during the past year.
In addition, Ofwat also reports that most companies have not fully invested their 2020-2023 allowed funding for delivering service enhancements.
David Black, Ofwat CEO said: 'The targets we set for companies were designed to be stretching – to drive improvements for customers and the environment.
'However, our latest report shows they are falling short, leading to £114m being returned to customers through bill reductions. While that may be welcome to billpayers, it is very disappointing news for all who want to see the sector do better.
'It is not going to be easy for companies to regain public trust, but they have to start with better service for customers and the environment. We will continue to use all our powers to ensure the sector delivers better value.'
Ofwat is currently investigating all 11 water and wastewater companies and there are live enforcement cases for six companies for potential failures on sewage discharges into the environment. There are also two live enforcement cases into Dŵr Cymru and South West Water in relation to the accuracy of reporting of leakage and per capita consumption performance.