English and Welsh water firms could be forced to return £107m via lower bills
Yorkshire and Thames among providers facing penalties for missing performance targets, but bills could rise elsewhere Business live – latest updates Thames Water, Yorkshire Water and other providers could be forced to cut tens of millions of pounds from household bills after the regulator said they had missed performance targets. Customer bills at Yorkshire Water could fall by £27 on average,…
Thames Water and Yorkshire Water, along with other providers, may face penalties for failing to meet performance targets, potentially resulting in a reduction of their customers' bills. According to figures from Ofwat, the regulator, Yorkshire Water customers could see an average bill decrease of £27, while Thames Water customers might see a decrease of £7.
The water industry has come under scrutiny in recent years due to rising bills, sewage pollution, high debt levels, and inadequate investment in ageing infrastructure. Instead of allowing customers to switch providers if performance is subpar, Ofwat employs an "outcome delivery incentives" system, which triggers automatic payments or penalties based on agreed-upon targets.
Yorkshire Water and Thames Water are expected to return £75.1 million and £45.8 million, respectively, after missing targets in 2025-26. Additionally, Dŵr Cymru (Welsh Water), South West Water, and United Utilities will return £16.7 million, £16 million, and £13.4 million, respectively. Conversely, Severn Trent and Northumbrian Water will receive rewards for meeting their targets, with an addition of £41.8 million and £35.9 million, respectively.
Northumbrian customers' bills could increase by an average of £21, while Severn Trent customers may face an increase of £8 per year. Overall, the water industry is projected to cut customer bills by a net £240 million for missing targets in 2025-26, with £107 million of that amount returned to customers in 2027-28. Ofwat is still in the process of finalizing the figures and has not yet determined the exact impact on each household.
The final decision on the payments is expected by December 15, with the changes taking effect on bills from April 1, 2027. The regulator has recently announced that water companies could see an additional £3.4 billion in annual tariffs, on top of the 36% average increase agreed upon over a five-year period to 2030.
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