Water firms set to return £240m to customers by 2030 for poor performance

Households are set to see £240 million taken off their water bills by 2030 because of poor supplier performance, regulator Ofwat has announced.

The water watchdog said it was proposing to hit a raft of firms across the sector with penalties for not meeting targets on environmental and customer service, which will be returned to households and businesses through their bills.

The total net bill reduction under the draft plans is £240 million by 2029-30, with £107 million being returned through customer bills in 2027-28.

But the cuts to bills are likely to be offset for many customers by recent plans announced by Ofwat to allow water companies to hike annual tariffs by an extra £3.4 billion – on top of the 36% average rise agreed over the five years to 2030.

Yorkshire Water and Thames Water will see the largest amount of underperformance payments taken off bills in April 2027 under Ofwat’s provisional plans, at £75 million and £46 million respectively.

Some firms will see outperformance payments, however, with the largest applying to Severn Trent and Northumbrian Water.

Ofwat stressed that changes to bills are “affected by a range of factors and the effect will vary by company and customer type”.

It will make its final decision on so-called outcome delivery incentive payments by December 15, which will take effect on bills from April 1 next year.