To the surprise of nobody who follows the English and Welsh water sector, the two companies that have been hit with the heaviest penalties for missing performance targets this year are the usual suspects: Southern Water and Thames Water. The dirty duo last year had to return £99m between them to customers after Ofwat’s annual tally of outcomes in areas such as water supply interruptions, pollution incidents and sewer flooding. This time the figure is £80m.
The top end of the league table, note, is also familiar. Severn Trent and United Utilities outperformed targets, as last year, and thus get rewarded by being allowed to recover more money via bills (which may feel less rewarding from the point of view of customers). Correlation doesn’t always imply causation, but it’s worth asking: do different ownership models help to explain the persistent gulf in operational performance?
