South West Water to pay money back to customers after failing to hit targets

The water authority is one of 11 around the country that will be hit with a financial penalty, the regular Ofwat has announced.

In this region, South West Water is likely to be paying £13.3million, which will be taken off customers’ bills in the next financial year.

In total almost £150 million in total will be paid by companies, as a result of missed targets on areas such as water supply interruptions, pollution incidents and internal sewer flooding.

Not all water companies have significantly missed their targets, however. Better performers such as Severn Trent Water have exceeded their targets in areas like biodiversity and are able to recover more money from customers. These decisions will impact customer bills in 2023-24.

The yearly targets, called performance commitments, are a combination of shared targets across the sector and bespoke individual targets on a wide range of issues.

They were set in 2019 at the last price review and are in place up until 2025, when the next price review, will come into place.

The automatic payments and financial penalties announced are based on whether companies have hit their targets and are known as outcome delivery incentives.

Companies paying back money and how much

• Thames Water £51m
• Southern Water £28.3m
• Northumbrian Water £20.3m
• Yorkshire Water £15.2m
• South West Water £13.3m
• Anglian Water £8.5m
• Dŵr Cymru £8m
• South East Water £3.2m
• Affinity Water £0.8m
• Hafren Dyfrdwy £0.4m
• SES Water £0.3m

David Black, Ofwat CEO, said: “When it comes to delivering for their customers, too many water companies are falling short, and we are requiring them to return around £150m 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 £80m 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.”

The draft decisions on how much companies will pay are now out for consultation and can be viewed on the Ofwat website, with responses emailed to in-periodODIs@ofwat.gov.uk The consultation closes on October 21.

A South West Water spokesperson said: “South West Water’s largest environmental investment programme in 15 years, is now well underway, focused on delivering benefits for customers, communities and the environment.

"We are reducing and then removing our impact on river water quality by 2030, maintaining our excellent bathing water standards all year round and we are driving improvements in leakage and wastewater pollutions performance.

"Our plans are delivering significant improvements across the South West and across a range of performance indicators.”

The company said a "significant proportion" of what has been identified was attributable to a single, widely reported incident, in which a third-party contractor, unconnected to South West Water, caused "significant damage" to water pipes during an installation near Truro in August 2021, which led to temporary water outages in the area. It added that engineers worked quickly to manage the incident and restore supply as rapidly as possible.