Water firms to pay £67m for missed targets

Overall, a net amount of £67m will be repaid to customers, with Thames Water and Southern Water ordered to return £53m and £46m, respectively. The largest outperformance payment will be received by Severn Trent, who will get £25m.

Based on the water regulator’s 2019 price control determinations, it sets out the price and service packages that companies have to deliver through to 2025.

The outcome delivery incentives (ODIs) are the financial or reputational consequences for companies of outperformance or underperformance against their performance commitments, which are reviewed year on year and affect the amount of revenue companies can recover from customers through 2022-23 bills.

The regulator has said it has agreed to defer some ODI payments from Severn Trent Water and Portsmouth Water.

In addition to this, and following a consultation about the impact of Covid-19 on customers’ use of water, Ofwat has decided to review company performance on per capita consumption at the end of the 2020-25 period, rather than by individual year.

Credit Strategy has reached out to both Southern Water and Thames Water for comment. A spokesperson from Thames Water said: “As announced in July we are extremely disappointed with our performance and sorry for the impact this has had on customers and the environment.

“In May we shared our turnaround plan over the coming eight years that has been developed by our new executive team in discussion with our colleagues, customers and other stakeholders.

“Improving our performance, particularly in customer service, supply interruptions, sewer flooding and pollution, is one of our biggest priorities as we turnaround our business. Our customers rightly expect to have a great service from us every time and, while we’re heading in the right direction, we have a long way to go.

“We’re investing in additional staff and new ways of working to improve quality for customers and we’re determined to do better. We are also committed to investing in our assets and systems, and working closely with communities and other stakeholders to address operational challenges.”