Ofwat proposes £240m return to UK water customers for poor performance

The UK water regulator, Ofwat, has proposed a plan to return £240 million to households and businesses by 2030 due to poor performance by water suppliers. The penalties are aimed at firms that fail to meet specific environmental and customer service targets during the 2025-26 financial year.

Under the draft plans, £107 million is expected to be returned through customer bills in 2027-28. Yorkshire Water and Thames Water are identified as the firms facing the largest underperformance payments, projected at £75 million and £46 million respectively for April 2027. Conversely, companies such as Severn Trent and Northumbrian Water may receive outperformance payments.

Ofwat noted that these bill reductions may be offset by recent plans allowing water companies to increase annual tariffs by an additional £3.4 billion, on top of an average 36% rise agreed upon through 2030. The regulator is expected to make a final decision on these incentive payments by December 15, with changes taking effect on bills starting April 1 next year.