What Ofwat penalties for failing UK water suppliers tell us
The UK’s utility regulator has confirmed fines of £70million are due to be paid by water companies that fell short of their targets.
That sounds like a lot, but in September Ofwat provisionally set out £114million in fines for English and Welsh suppliers. A £44million reduction that seems at odds with headlines over the past 12 months.
The regulator judges performance on targets set every five years. These factor in disruption, leaks and pollution, among other criteria. From sewage dumping across the 97% of British coastline yet to be given any kind of real environmental protections, to horrifying waste caused by an ageing network suffering decades of poor maintenance, the barely a week has passed without reading about some localised cataclysm in seas, rivers and lakes, raising serious questions about how high, or low, the standard is set.
Of course, there are big differences between the suppliers. Thames Water, for example, leads the pack with the largest fine of all. In total, a further 12 face financial penalties. This leaves five firms, including Severn Trent Water and United Utilities, without fines, which may surprise some customers given those two firms in particular have both made national news for all the wrong reasons.
Things have got so bad at United Utilities the company has pledged £13.7billion to improve its own record on water and sewage leaks, with one incident at a treatment plant in Fleetwood costing £30.5million alone. Meanwhile, concerns were raised this summer by a councillor in Gloucestershire over Severn Trent Water’s ‘continuous sewage spills‘ in the preceding months. The idea neither of these companies is to face repercussions smarts, but not as much as the fact both are now entitled to increase customer bill prices as a result of their performance.
Those supplied by those supplied by Wessex Water, South Staffs Water and Portsmouth Water can also expect a marginal rise in prices in the near future. If nothing else, this makes it clear who the winners and losers are in the ongoing water management crisis. When suppliers perform badly the public loses out, whether that’s being unable to bathe in coastal areas or watching as vital fresh water sources are contaminated with dangerous run-off. But when suppliers perform well, the public still stands to pay for it with higher tariffs.
In contrast, the winners take all – something that is more than apparent in criticism of Ofwat itself, with two-thirds of former executives at the organisation going on to work in senior roles at water suppliers, leading to accusations of a ‘revolving door system‘ between the authority and the private companies it was established to police. Meanwhile, earlier this year the Environment Agency, itself no stranger to staunch public and political criticism, labelled the regulator’s most recent report – in which the intended £114million in fines was announced – as ‘disappointing‘. We can only wonder what word would now be used given the total cost of poor performance has plummeted.
More on water pollution and management:
Ocean acidification will soon be irreversible, costing $400bn
‘Intersex’ fish still rife in UK rivers despite improved sewage treatment
Image: Ivan Bandura