YORKSHIRE Water has been named one of the UK's worst performing water firms by the regulator - and will be required to return more than £15 million to customers.

The Bradford-based company must now explain what has led to its poor performance and present a clear action plan to turn this around, Ofwat said, as it published its annual assessment of company operational performance and financial resilience.

The regulator singled out Yorkshire Water, Northumbrian Water, Southern Water, South-West Water, Thames Water and Welsh Water, saying it is “deeply concerned by those that are lagging behind expectations”.

Poorer-performing companies face a financial hit because of missed targets on water treatment works compliance, pollution incidents, and internal sewer flooding across 2021/22 and will have to reduce customer bills accordingly. These decisions will impact customer bills in 2023-24. 

Between 2020 and 2022, 14 companies underspent their budget on improving their water network and eight companies underspent their budget for improving their wastewater network.

Yorkshire Water spent only 20 per cent of its wastewater enhancement allowance in 2021/22, but has highlighted it is committed to spending all its allowance to improve the environment in Yorkshire.

A spokesperson for Yorkshire Water said: “Over the past year, we have not always met the standards we set ourselves in some areas, but key metrics including leakage reduction, the health of our networks in terms of mains repairs, sewer collapses and low pressure, were all achieved. We know we have more to do and are committed to addressing the areas where our performance has not been as good as we need it to be.

“We are committed to spending all our allowance on improving the environment in Yorkshire. The current investment plan runs over a five-year period to 2025 and during this time we’ll invest almost £1bn to improve river quality in our region. The majority of our environmental investment is to reduce phosphorus in the rivers of Yorkshire, which will achieve many of the long-term government targets in this area.

“The latest performance report covers just two years of the current five-year period, where we have devoted time to designing better environmental catchment solutions than the traditional engineered solutions that will improve the environment while providing the best value for our customers. In the coming years, these solutions will be implemented and our investment will be achieved by the end of 2025, as agreed with Ofwat in order that we meet our regulatory obligations.

“Our shareholders have not received dividends for the last seven years and we are not expecting to pay dividends during this current five-year business plan period which ends in 2025. Our shareholders are committed to investing in improved performance at Yorkshire Water, to protect the environment and to ensure the financial resilience of the business into the future. To this end they have agreed to support the repayment of intercompany loans and additional investment to reduce storm overflow spills. We will remain actively engaged with Ofwat while we take the steps necessary to meet our agreed commitments”

A draft decision shows Yorkshire Water could have to return £15.2 million to customers because the company has not hit its targets, set out in 2019, which will be reviewed in 2025.

David Black, Ofwat CEO, said: “When it comes to delivering for their customers, too many water companies are falling short, and we are requiring them to return around £150m to their customers. 

“We expect companies to improve their performance every year; where they fail to do so, we will hold them to account. The poorest performers, Southern Water and Thames Water, will have to return almost £80m to their customers. All water companies need to earn back the trust of customers and the public and we will continue to challenge the sector to improve.” 

In September, this year it was revealed that Yorkshire Water was ranked at the bottom of the leader table for customer satisfaction and experience for water and wastewater companies.

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