Southern Water ordered by regulator Ofwat to pay out £43m to customers

The New Forest’s Southern Water customers can expect reduced bills after the firm was ordered to pay out £43m due to underperformance and missed environmental targets.

The rebate was ordered by Ofwat this week after the majority of water and wastewater firms across England and Wales were said to have failed to hit targets when it came to reducing pollution incidents and leakage.

Companies must now return a total £114m to customers next year through reduced bills.

Ofwat said it set “stretching targets” for 2020-25 to deliver better outcomes, and where they fall short on these the regulator reduces the amount of money companies can collect from customers.

In its newly published annual Water Company Performance Report, Ofwat categorises companies’ as ‘leading’, ‘average’ or ‘lagging’, against a set of common metrics including pollution incidents, customer service and leakage.

This year, no company has been ranked in the ‘leading’ category, while 10 were said to be ‘average’ and seven categorised as ‘lagging’ – one of which is Southern Water.

While firms were said to have improved in areas including internal sewer flooding and unplanned water outages, progress across the board was said to be slow.

“In 2022/23, fewer than half of companies achieved their performance target on reducing pollution incidents and fewer than half of the companies met their performance commitment on leakage,” said Ofwat. “This performance is matched by an overall decline in customer satisfaction during the past year.

“In addition, Ofwat also reports that most companies have not fully invested their 2020-2023 allowed funding for delivering service enhancements.”

David Black, Ofwat CEO, said while the announcement may be “welcome news” for billpayers, it is “very disappointing for all who want to see the sector do better”.

“It is not going to be easy for companies to regain public trust, but they have to start with better service for customers and the environment,” he said. “We will continue to use all our powers to ensure the sector delivers better value.”

A spokesperson for Southern Water said the company had been clear it needed to “do better”, and has set out an an “ambitious turnaround plan supported by significant new investment from shareholders of £1.6bn since 2021”.

“This is allowing us to spend a record £3bn on our network between 2020 and 2025 – the equivalent of £1,500 per household,” they said.

“This year, we are already seeing encouraging signs of performance improvement - reducing pollutions and leakage and improving customer service – in line with our plans.

“We realise that these improvements will take time to feed through into future performance metrics, and we are determined to continue improving.”

As reported in the A&T earlier this month, Southern Water and Wessex Water have been accused of breaching their permits by dry spilling – discharging sewage when it was not raining.

This practice is banned because it can lead to higher concentrations of sewage in waterways.

According to a BBC investigation, the companies – along with Thames Water – appear to have collectively released sewage in dry spills for 3,500 hours in 2022, which puts them in breach of their permits.

Southern Water said there are large numbers of private sewer pipes on its patch affected by ground water forcing its way in, which was out of its control.

An investigation has also been launched by the Environment Agency after footage showed raw sewage from a burst pipe flooding into a stream which leads to the Beaulieu River.

The incident in August, near the entrance to New Forest Golf Club in Southampton Road, Lyndhurst, was monitored by EA officials for a week.