£114m water bill reduction ordered by Ofwat

The water industry regulator, Ofwat has instructed 12 water companies to reduce planned water bills for customers next year after they were found to have missed key performance targets. Water leakage, supply and customer satisfaction featured among the targets that companies fell short of while some water companies failed to use incentives made available to improve infrastructure in the sector.

Ofwat's performance findings

This week, Ofwat issued its 'Water Company Performance Report 2022-23' which assessed 17 water and wastewater companies in England and Wales revealing that many did not meet the targets that it set to improve customer experience and the industry's effects on the environment. As a result, the regulator has reduced the amount of money that each failing company can collect from its customers.

Ofwat's chief, David Black 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 bill payers, 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.”

Which water companies fell short?

The regulator arranged water companies into three categories - ‘leading’, ‘average’ and ‘lagging’ in areas of performance including pollution incidents, customer service, leakage and supply. Interestingly, of the 17 companies that were assessed, none were categorised as 'leading' overall. Of those 17 companies, 12 have been ordered to return over £23 million between them, while 5 water companies will be allowed to raise costs for their customers by £122 million, resulting in a net rebate of £114 million.

If you are unsure which water company supplies your water services, you can check using 'Find your water supplier' by entering your postcode. You may be billed by different companies for your water supply and your waste services.

Rebate amount by water company

Water company	Amount to be rebated (million)
Affinity Water	£8.088 million
Anglian Water	£22.357 million
Dŵr Cymru	£24.080 million
Hafren Dyfrdwy	£0.513 million
Northumbrian Water	£0.113 million
SES Water	£1.123 million
South East Water	£5.23 million
South West Water (South West area)	£9.244 million
South West Water (Bristol area)	£2.577 million
Southern Water	£42.903 million
Thames Water	£100.719 million
Yorkshire Water	£19.825 million
Total	£236.772 million

Amount water bills can be raised by company

Water company	Amount available to charge more
Portsmouth Water	£0.302 million
Severn Trent Water	£88.083 million
South Staffs Water	£0.869 million
United Utilities	£25.229 million
Wessex Water	£7.96 million
Total	£122.44 million

What does this mean for your water bill?

Water customers will not receive a share of the £114 million rebate as a direct payment - instead, it is likely that water companies will issue the rebate by reducing bills. It is not entirely clear whether customers will see the rebate itemised in their bills as the details are yet to be confirmed by each water company. Also, water customers may not necessarily see their water bills reduced from this year, as the reduction is likely to be applied to planned costs for 2024/25.

In light of the cost of living pressures, any reduction in bills will be positively received by many households struggling to meet rising costs. However, there are a number of things that you can do to reduce your water bill such as fix any leaks, taking showers instead of baths as well as collecting rainwater using a water butt to water your garden.

If you are on a water meter, you will be charged for the water that you use as well as standing charges for maintenance and billing. However, those who do not have a water meter installed, will be billed according to the rate applied to your home and this may take account of the number of bedrooms in your home. It can help to contact your water company if you feel that the water rates applied to your home are incorrect. Those who could save money include those who have fewer people living in the house than the number of rooms and also those who spend periods of time away from their home. A water meter is the best way to ensure that you only pay for what you use and your water company should provide one if you request it. The process may be different depending on the water company and so it is worth getting in touch to see what you need to do.

You can find detailed information about how your water bill works and what you can do to reduce it in our article, "How to save money on your water bills".