Welsh Water has been fined £8m by industry regulator Ofwat after failing to meet a number of targets including on water compliance and interruption to supply.
The penalty for the not-for-profit water company will be charged by a corresponding reduction in customer bills in the next financial year.
Welsh Water is one of 11 water firms which significantly missed some targets and collectively will have to reduce bills by £150m. The biggest financial penalty is for Thames Water at £51m. Better performers such as Severn Trent Water exceeded their targets in areas like biodiversity and are able to recover more money from customers. In the case of Severn Tent it is £62.9m.
Small North Wales water company Hafren Dyfrdwy has been fined £400,000.
The annual targets from the regulatory, 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. These are in place up until 2025, when the next price review comes in effect.
In the areas of pollution, internal sewer flooding and customer service, Ofwat provided rewards for Welsh Water for its strong performance. However, that was offset by an under performance in others that led to the overall £8m penalty. For all 11 water companies the £150m in fines were offset by nearly £100m in rewards - giving an overall negative balance of £53.4m.
David Black, Ofwat chief executive, 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.”
A spokesman for Welsh Water said: “Following the assessment by Ofwat, we are pleased that they have acknowledged our efforts to reduce flooding and pollution following our better than target performance on these measures. However, we also recognise their findings of ways we can improve other parts of our services and we are investing £1m a day in our water and wastewater services to continuously improve the service we provide for our customers.
“As the only not for profit water company in England and Wales, our operating model allows us to use any profit – money that in other companies would go to shareholders – to lower bills, accelerate investment and help vulnerable customers. We recently announced that we will be investing £12m this year to support our most vulnerable customers during the current ‘cost of living’ crisis. 127,000 of our customers now benefit from discounted bills through social tariffs - a larger number, proportionate to the company’s size, than any other water company in England and Wales.”
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