Anglian Water customers will see their bills cut next year after the company was fined £8.5 million by a water regulator for underperforming in key areas such as managing pollution incidents.
The firm is one of 11 water companies to be handed a fine by regulator Ofwat, citing missed targets in water supply interruptions, internal sewer flooding and pollution incidents, such as sewage storm overflows.
Ofwat’s report into these targets, released on October 3, states that these “performance commitments” by water suppliers are put in place to set environmentally friendly targets across the sector.
Anglian Water, which operates across the East of England and covers Lincolnshire, was fined £8.5 million that will, in theory at least, be taken off customer bills for the next financial year.
However, it has been noted that water firms are allowed to increase their charges in line with the ever-growing inflation rate. This will be done using the consumer prices index including owner occupiers’ housing costs.
This means reductions to customer bills could well be offset by inflation-caused price rises next year, but Anglian Water says the multi-million pound fine “will be reflected” in customer bills next year.
An Anglian Water spokesperson said: “As part of the water industry regulatory framework, Ofwat measures company performance across many different areas.
“This is reflected in outperformance or underperformance payments depending on individual company performance against specific measures.
“For 2021/22, the balance of our performance across all these areas meant that we incur an underperformance payment of £8.5million, which will ultimately be reflected in customer bills in for 2023/24.
“While we’ve performed well in some areas, we are not where we need to be in others. This is something we’re determined to improve upon.”
Targets were set and handed out to water companies in 2019 at the last price review, and are in place until 2025, when the next price review comes into place.
Ofwat says fines were handed out based on whether companies “hit their targets” and are known as outcome delivery incentives – with water companies that exceeded their targets being allowed to recover money from customers by increasing bills.
David Black, Ofwat CEO, 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.”