14 March 2024 , 11:20
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Welsh Water has been told to pay nearly £40 million to customers after the industry watchdog found the firm misled them about its record of tackling leaks and saving water.
Ofwat started an investigation in May last year and found evidence of a "significant failure of governance and management oversight" at Welsh Water. This led the firm to misreport leaks and performance over a period of five years.
Welsh Water will have to pay £39.4 million in redress to customers for its failures, with £15 million already announced by the firm, and another £9.4 million to follow, which will lower bills for users. An extra £15 million of costs will be absorbed by the water firm, rather than being passed on to customers, according to Ofwat.
Ofwat said Welsh Water also needed to address its poor performance on leaks and water usage, with the firm pledging to invest an extra £59 million in the current five-year price period. It comes amid intense scrutiny of the water industry and an outcry over the sector's dire performance on leaks, raw sewage spills and poor customer service. There have been mounting calls for the sector to renationalised.
David Black, chief executive at Ofwat, said: "For five years, Welsh Water misled customers and regulators on its record of tackling leakage and saving water. It is simply indefensible and that is why we are making Welsh Water pay this £40 million to benefit its customers."
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"Today's announcement puts the industry on notice that we have the resources and will act when companies fail to meet their obligations to customers."
Pete Perry, Welsh Water Chief Executive said: “We are very sorry that this happened. We proactively brought this issue to Ofwat’s attention in April 2022 having identified it as part of our annual performance assurance process.
"Ofwat’s key conclusions as to what went wrong align with our own investigations that were shared with Ofwat together with our proposals for customer redress and additional investment to tackle leakage and per capita consumption. Rebates have already been made to 1.4 million customers.
“Our review identified governance and management oversight failures that led to the issues identified which have now been addressed. Achieving the planned reduction in leakage will be challenging, but we have committed a substantial increase in expenditure in this area and strengthened the relevant operational teams to recover performance.”