Britain’s regulator ordered water companies to return a total of £157.6-million ($206-million) to customers after missed environmental targets, the latest penalties slapped on an industry at the centre of a scandal over polluting rivers.
Britain’s new government came to power in July promising to clean up the industry after sewage releases into waterways sparked anger against the privatized companies, which are accused of prioritizing profit over infrastructure investment.
Regulator Ofwat said on Tuesday that the industry was falling far behind a target to cut the number of sewage spills by 30 per cent over the 2020-25 period, with incidents only down 2 per cent.
Water bills in 2025-26 would be reduced to reflect the missed targets, with Ofwat saying the money would come from shareholder returns, not investment. The country’s biggest supplier, Thames Water, will lose £57-million for missing the targets, the heaviest penalty.
Ofwat said the exact amount to be returned to customers will be finalized in December.
It is a new financial blow for struggling Thames, which is at the centre of the crisis in the country’s water industry. It warned in September it could run out of money in three months unless creditors approved further borrowing.
The water companies say wet weather has resulted in a higher level of sewage releases. They have asked the regulator to allow bills to rise an average 33 per cent over the next five years so they can lift investment to improve their performance, but Ofwat wants to cap bill rises at 21 per cent.
Announcing the penalties, Ofwat CEO David Black said company culture and leadership were to blame for the missed targets.
Under the performance failures, Anglian Water is set to lose £38-million and Yorkshire Water £36-million, while a minority of companies including United Utilities and Severn Trent beat targets and will receive payments instead.
“We need to see all companies sharpen the focus on performance and do away with the culture of blaming others and focusing on what they can do,” Black told BBC Radio, adding that the firms should look at innovation and new technology.
Industry body Water U.K., which represents the companies, conceded performance was not what it should be but said some improvements had been made on water leakage.
“We know there is much more to do and companies are fully committed to boosting performance,” a spokesperson said.
The companies are already facing Ofwat fines for sewage spills over the five years to 2022. Under a package announced in August, Thames Water, Yorkshire Water and Northumbrian Water face penalties of £104-million, £47-million and £17-million respectively.