Britain's water companies have been ordered to return 157.6 million pounds ($206 million) to customers after missing environmental targets, as penalties mount for an industry under fire
for polluting rivers.
The new government, which took office in July, pledged to reform the industry following public outrage over sewage discharges into waterways. The privatized companies have faced criticism for prioritizing profits over necessary infrastructure investment.
Regulator Ofwat said on Tuesday that the water industry is significantly behind its target of reducing sewage spills by 30% during the 2020-2025 period, with incidents down only 2% so far.
Water bills for 2025-26 will be adjusted to reflect the missed targets, with Ofwat stating the penalty funds will come from shareholder returns rather than investment. Thames Water, the largest supplier, faces the biggest penalty at 57 million pounds for failing to meet the targets.
The exact amount to be returned to customers will be confirmed in December, according to Ofwat.
This represents another financial blow for Thames Water, already struggling amid a crisis in the sector. The company warned in September that it could run out of funds within three months without further borrowing approval from creditors.
Water companies have attributed the increased sewage discharges to wet weather and have requested regulatory approval to raise bills by an average of 33% over the next five years to boost investment. However, Ofwat is aiming to cap increases at 21%.
Announcing the penalties, Ofwat CEO David Black blamed poor company culture and leadership for the failure to meet environmental targets.
Underperformance penalties will also impact Anglian Water, set to lose 38 million pounds, and Yorkshire Water, which will lose 36 million pounds. In contrast, companies like United Utilities and Severn Trent surpassed their targets and will receive payments.
"We need to see all companies sharpen their focus on performance, abandon the blame culture, and take responsibility for improvements," Black told BBC Radio, emphasizing the importance of innovation and new technology.
Industry group Water UK acknowledged that performance had fallen short but noted some progress had been made in reducing water leakage. "We know there is much more to do, and companies are fully committed to boosting performance," a spokesperson said.
The companies are also facing fines from Ofwat for sewage discharges between 2018 and 2022. Thames Water, Yorkshire Water, and Northumbrian Water face penalties of 104 million pounds, 47 million pounds, and 17 million pounds respectively, under a package announced in August. Photo by Davide Restivo from Aarau, Switzerland, Wikimedia commons.