Under-performance by the majority of water and wastewater companies in England and Wales, will mean companies have to return £114m to customers next year.

The rebate, set out today by Ofwat following its assessment of performance against targets set for 2022/23, will come off customers’ bills for next year. Water companies were set stretching targets for 2020-25 to deliver better outcomes, for both customers and the environment.

Where they fall short on these, the regulator reduces the amount of money companies can collect from customers.

Ofwat’s decision comes as it publishes its annual Water Company Performance Report, which categorises companies’ performance as ‘leading’ ‘average’ or ‘lagging’, against a set of common metrics including pollution incidents, customer service and leakage. This year, no company has been ranked in the ‘leading’ category.

Ten companies are in the ‘average’ category and seven have been categorised as ‘lagging’ (Anglian Water, Dŵr Cymru, Southern Water, Thames Water, Yorkshire Water, Bristol Water and South East Water).

​​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.