The water industry regulator has been accused of making a “meaningless gesture” after it reduced the amount that Thames Water has been asked to hand back to customers over poor performance by more than a quarter.
Ofwat has published its final determinations on how much each of England and Wales’s water companies should give to customers after underperformance on targets in tackling leakage and sewage spills.
In September the regulator said that Thames, Britain’s biggest water company, would have to hand £101m to customers, the most of any company.
On Tuesday, it said the penalty had been reduced to £73.8m in its final determinations – roughly £4.92 for each customer. Ofwat said the decision came after Thames had submitted “substantive detail” on its tax losses for 2020 to 2025. Ofwat said that if it had not made the decision it would have “weakened” the financial incentives for companies to carry out much needed upgrades on Britain’s water infrastructure.
Ofwat said 12 firms would have to return a total of around £193m to customers, partially offset by five companies being able to charge about £123m more, resulting in a net total of £70m being paid out by companies to customers.
The regulator had said in September that firms would return a net total of £114m, but that amount was provisional until the review process was completed.
Thames intends to increase bills by £175 – from £436 to £611 a year – from 2025 to 2030. The debt-laden company, which has seen the abrupt resignation of its former chief executive and emergency contingency plans for its collapse drawn up this year, plans to invest £18.7bn in service and infrastructure upgrades.
James Wallace, the CEO of River Action, said: “This shallow gesture is meaningless to communities and another example of the senseless regulation of the water industry by Ofwat.
“We would rather see the regulator issue much higher penalties to water companies for failing to provide their legal obligations to customers. Ofwat should direct Thames Water shareholders to urgently invest in fixing its leaky infrastructure, which wastes 600m litres of fresh drinking water a day and spew millions of litres of sewage into the river catchment.”
A spokesperson for the Henley Mermaids wild swimming group in Henley-on-Thames said: “In September, Ofwat announced that Thames Water would be required to repay £101m to customers because of chronic underperformance on leaks and sewage dumping ...
“Now we learn they will be returning only two-thirds of that amount. At the same time, Thames Water is increasing bills for customers already struggling under the cost of living crisis. Yet again, the regulators are propping up the decaying water industry and its customers, and our rivers are paying the price.”
Munira Wilson, the Liberal Democrat MP for Twickenham, said: “While people’s water bills rise, these water firms keep getting away with it. Thames Water should pay the full amount Ofwat has declared and rightfully put their customers first.”
Southern Water deferred £21m of its £43m penalty into the 2025-26 financial year, while Dŵr Cymru (Welsh Water) is paying £24m. Anglian Water customers will see more than £27m taken off their bills.
The move also allows some companies to raise bills next financial year. Severn Trent is able to increase bills by £88m and United Utilities, which serves the north-west of England, by £25m after hitting targets.
