Welsh Water has agreed to pay its customers £40million after misleading regulators regarding its performance in terms of leakages and water consumption.
Ofwat, a water regulator, stated that the company has been providing inaccurate data to its customers for the last five years, in an “indefensible manner”. It ordered the company to pay compensation to their customers and invest in improving performance.
Welsh Water has to pay £39.4million to customers to compensate them for their failures. The majority of this money will be given to the 1.4 million water customers as a £10 discount on their bill, which was already announced by the company last year.
In May of last year, a case was opened against Welsh Water after the company informed Ofwat it had identified issues with its reports regarding leakages and consumption per capita. The regulator found that Welsh Water had “significantly underplayed its poor performance” over a five-year period due to “failure in governance and management oversight”. The regulator found that the leakage was much higher than initially thought and that consumption per capita had been lower. Ofwat found that both figures were manipulated to make sure that the company met the leakage target set by the regulator.
The report added that misreporting had been “at least in part intentional” and staff must have known that attempts to adjust numbers to stay within target would “effectively hide the true level of leakage”.
The company will also invest an additional £59 million in its infrastructure before 2025, along with the payments to customers.
Welsh Water chief executive Pete Perry, aged 61, expressed his company’s “deep regret” for the incident. The planned reduction in leakage is a challenge, but we’ve committed to a substantial increase of expenditures in this area. We have also strengthened the relevant operational team in order to recover performance.
David Black, chief executive officer of Ofwat said: “Welsh Water has misled regulators and customers for five years about its record in tackling leaks and saving water. This is indefensible, and we will make Welsh Water pay the £40 million for its customers. The announcement today sends a clear message to the industry that we are prepared to act if companies fail to fulfill their customer obligations.”
After reviewing the business plans of water companies, Consumer Council for Water (the consumer organization representing water users in England and Wales) found that the average water bill is set to increase by 40 percent after inflation by 2030.
Southern Water plans to raise bills by 70%, while Thames Water has predicted a bill increase of 56%, even with inflation. These two companies have failed to meet their targets in terms of delivering water and wastewater services.