Thames Water is facing repayment totals for under-performance of £56.8m, Ofwat has said. 

Water companies will have to pay a £157.6m penalty after missing key targets on reducing pollution, leaks and supply interruptions while customer satisfaction continues to fall.

In an annual performance report on water firms, Ofwat said customer bills will be slashed in 2025-6 to reflect the penalties, with the total rebates calculated in December.

Not one company achieved the regulator’s top category of “leading” while Anglian Water, Welsh Water and Southern Water fell into the lowest category of “lagging” while the remaining 10 were rated “average”.

Thames Water moved up a category from “lagging” to “average” as it met some performance targets on leakage and supply interruptions.

Despite this, the heavily indebted London water provider will have to pay £56.8 million, the biggest fine for the fourth straight year.

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Water company repayment totals for under-performance in 2023/24 (Image: PA Wire) Ofwat judges the performance of water companies in England and Wales each year against the “stretching” targets they set in 2019 for a five-year period until 2025.

If they fail to meet these, Ofwat restricts the amount of money they can take from customers.

Ofwat said the figures are provisional until it completes a review process.

David Black, chief executive of Ofwat, said: “This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.

“It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings.

“Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the Government or regulators tell them to act.

“As we look towards the next price control, the challenge for water companies is to match the investment with the changes in company culture and performance that are essential to deliver lasting change.”

James Wallace, CEO of campaign group River Action, said: “This might sound like a lot of money but frankly it is a drop in the ocean for polluting water companies that have handed billions in dividends and interest payments to investors.

“Clean and abundant water and healthy ecosystems are fundamental to human life and our economy.

“Yet, water companies continue to pollute the nation’s waterways without facing the full force of the law or sufficient penalties.”

Severn Trent, SES Water, Northumbrian Water, and United Utilities beat their targets and will be allowed to charge more next year, as part of an incentive scheme.