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Ofwat warns some companies 'fall short of expectations'

Ofwat has today its annual assessment of water companies' performance.

The regulator finds that some companies are making good progress, and all companies demonstrate some aspects of leading performance, but there remains more for companies to do to deliver for customers and the environment and warns that some “fall short of expectations”. 

The report collates operational performance data across a number of different areas and shines a spotlight on the service that customers receive from their water companies.

Today’s report shows that the performance of four companies – Northumbrian Water, Wessex Water, Bristol Water and South Staffs Water – across a range of measures is encouraging, with Wessex Water appearing in the top category for the second year running.

However, it is disappointing news for the customers of the poorer performers. The regulator expects these companies - Thames Water, Southern Water, Affinity Water and Hafren Dyfrdwy - to deliver a real change in performance.

Ofwat’s regulatory approach incentivises good performance and the report shows that, year on year, the water sector is making good progress in particular areas including hitting targets on leakage, reducing supply interruptions and improving customer satisfaction.

Other areas, including the environmental impact that water companies are having, need significant improvement.

Highlights of the report include

  • Leakage and water consumption – these are key priorities for customers. Lower leakage and consumption means less water is taken from the environment and fewer resources are required to process it.
    • Ofwat has set a tough challenge for companies to reduce leakage. This year sees a step change compared to previous years, with most companies achieving their targets and, overall, meaningful progress following 20 years of stagnation. Reported leakage is 7% lower and has been delivered using a range of solutions with relatively low costs.
    • Water consumption performance, however, has been poor. In 19/20 only three companies met their performance commitments. Rapid progress is needed.
  • Pollution - while some companies have delivered consistent reductions and met the expectations of regulators, the sector is still not making enough progress in this key area with some companies being cause for particular concern. South West Water has missed most of its pollution targets in the past five years and Southern Water demonstrates extremely poor performance – it became the first company to be rated as 1 star by the Environment Agency since 2015.
  • Customer satisfaction - Ofwat’s new customer measure of experience is intended to drive further improvements, particularly among the best performing companies in this area who, from 20/21, stand to achieve significant outperformance payments. The poorer performers will incur underperformance penalties of up to £20 million for the largest company.
  • Supply interruptions – in comparison to 2012-13, companies have reduced the total amount of supply interruption minutes experienced by customers by 36%, which is 145 million minutes. This year, performance has continued to improve and levels are amongst the lowest in the last seven years.

Ofwat’s new strategy, published last year, commits to using its data and insight to better drive performance. Today’s report provides transparency for customers on how companies are performing and where improvements need to be made.

Rachel Fletcher, chief executive at Ofwat, said: “Ofwat is working to transform water companies’ performance for customers. It is encouraging that some companies are making good progress by listening to customers and improving the service they provide. But others are falling short of expectations and still have much ground to cover. They must act with urgency and real commitment, to meet the standards people deserve.

“We are pleased that companies are rising to the tough challenges we set on leakage following years with little improvement, and good progress is also being made on supply interruptions. Both are high priorities for customers and we expect to see that progress continue in the coming years.

“But environmental performance is still not good enough. Minimising water companies’ impact on the natural world and leaving the environment in a better state for future generations will only happen if the environment is given greater attention.  New targets for the coming year will start to bite if faster progress is not made in this area.”

A one page summary and the full report are attached, and can also be seen here.

Topic: Customer experience , Leaks & bursts , Policy & Regulation , Water resources

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