Water companies must improve their environmental impact, Ofwat annual report urges

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The environmental impact of water companies needs significant improvement, regulator Ofwat’s annual performance assessment warns.

The Service and Delivery Report 2019-20 finds that some companies are making good progress, and all companies demonstrate some aspects of leading performance, but there still remains more for companies to do for their customers and the environment and warns that some companies ‘fall short of expectations’.

Rachel Fletcher, Chief Executive at Ofwat, commented on the report: “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.”

Source: Ofwat

Highlights of the report include:

  • Leakage:  This year sees a step change in leakage 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 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 among the lowest in the last seven years.

The full report can be read on the Ofwat website.