Dwr Cymru Welsh Water invested a record amount of £629 million during the last year of AMP7 in its water and wastewater networks, a 31% year-on-year increase to maintain and improve its assets according to the company’s interim financial results for 2024-25.

The water company said the largest capital investment programme in its history drove improvements across its networks and ensured that Welsh Water was in a strong position to deliver on its largest ever investment programme and improved service targets required for AMP8.

The projects include replacing the treatment process at Cardigan Wastewater Treatment Works, improving sites at Eign and Rotherwas in Hereford, upgrading the wastewater network within Usk, increasing capacity at Bangor Beach Road wastewater pumping station and investment to renew and upgrade the water network at Trap and Llandyfan in Carmarthenshire.

Financial results highlighted in the report include:

• Gearing – total net borrowings as a percentage of regulatory asset value – currently at 62% compared to 93% in 2001 (2023-24: 60%)
• Credit ratings Baa1/BBB+/A-.
• Investment during 2024-25 totalled £629m (2023-24: £481 million), part of the company’s £2 billion-plus AMP7 investment programme.
• Operating expenditure, inclusive of impairment of trade and other receivables but net of other operating income, was £416 million (2023-24: £394 million).
• Operating loss (before interest and tax) of £8 million (2023-24: operating profit of £46 million).

The result for the year is an overall loss before taxation of £146 million (2023-24: £172m loss), a decrease in loss of £26 million as a result of an increase in fair value gains on derivative financial instruments.

Welsh Water continues to be amongst the sector’s top performing companies for customer trust and satisfaction. The company also saw improvements on leakage, internal and external flooding incidents and its performance against the Drinking Water Inspectorate’s Compliance Risk Index.

However, the company has acknowledged that the improvements will need to be maintained and accelerated as the company seeks to improve its Environmental Performance Assessment rating from 2 stars to 3 stars, move out of Ofwat’s ‘lagging company’ categorisation and respond to the Drinking Water Inspectorate’s Transformation Programme.

During the last twelve months, the company has also continued to invest to mitigate the impact of climate change, such as extreme weather, by building the UK’s largest spillway at Llyn Celyn dam in north Wales. It has also had to manage the impact of two of the most difficult operational incidents it has faced in decades.

A temporary ‘boil water’ notice was issued in November due to damage caused by Storm Bert to the Tynywaun Water Treatment Works in the Rhondda Valley, and in January, a burst of a strategic water main under the Afon Ddu river caused a supply interruption affecting 40,000 properties in the Conwy area.

Welsh Water’s focus on improving river water quality was reflected with 231km of rivers improved in 2024-25. The company has been working in collaboration with other bodies including Nutrient Management Boards to support improvements in Special Areas of Conservation rivers.

To fund its record investment requirements over the next 5 years , the company confirmed in February that it was necessary to increase the average household bill for 2025-26 by 27%, and acknowledged the increased burden this would put on customers. The company also confirmed that it is providing financial assistance to a record 153,000 customers of its most vulnerable customers who struggle to pay their water bills.

Jane Hanson CBE, Chair of Glas Cymru, the company which owns, finances and manages Welsh Water, said the next 12 months will be pivotal for the utility as it secures the foundations for the step change in performance that is needed.

“Our AMP8 Business Plan is our most ambitious to date, with total expenditure of £6 billion and £4.2 billion in capital investment. This involves scaling up our supply chain and supporting another 2,000 roles but there is no quick fix — we recognise the scale of the task ahead and that progress will take time.”

Welsh Water Chief Executive, Peter Perry, commented:

“As we embark on the new investment period for 2025 to 2030, we know that we need to go further and faster if we are to make the step change in performance needed to meet the evolving needs of our customers, communities and stakeholders.

“We are expending every effort to improve areas of performance, and we have already seen progress in a number of fields over the last year. This includes areas such as leakage where we have reduced leakage over the past 12 months which helps us manage water supplies given that February to April was one of the driest equivalent periods on record.

“The next 12 months are critical in driving service improvements, along with effectively communicating the benefits of our non-shareholder model. This will help ensure that we play our part in setting the strong foundations needed for the next 25 years of Glas Cymru.”

Operational performance highlights include:

• Performance against the Drinking Water Inspectorate’s Compliance Risk Index (CRI) Measure improved to 4.5 (2023: 7.74)
• In 2024-25, the average customer minutes lost to supply interruptions grew to 137 minutes and 44 seconds compared to 23 minutes and 16 seconds in 2023-24 (largely driven by storms and large scale interruption in Bryn Cowlyd water treatment works)
• Annual leakage decreased to 249.7 megalitres per day (2023-24: 251.7 megalitres per day).
• Improved overall wastewater treatment works performance: 98.71% of works fully complied with discharge permits in 2024-25 (2023-24: 97.34%)
• 132 pollution incidents were recorded in 2024-25 (2023-24: 107) with the increase largely due to widening definitions of what constitutes a pollution incident by the environment regulators and is consistent with the rest of the sector.
• The number of internal sewer flooding incidents per 10,000 connections decreased to 1.26 (2023-24: 1.35)
• 231km of river were improved in 2024-25 (2023-24: 223km) reflecting s focus on improving river water quality in collaboration with other bodies including Nutrient Management Boards supporting improvements in Special Areas of Conservation rivers.