Ofwat is calling for the water companies to improve their performance on sewer flooding and pollution incidents with publication this morning of its analysis of their annual performance reports published in July 2015.

The water industry regulator has also set out details of steps individual companies are required to take to further improve performance.

Ofwat said that the companies had reported that they generally delivered good levels of service to most consumers in 2014-15 – however, there are areas they need to improve, in particular sewer flooding and pollution incidents.

Water companies have published information showing customers how they are performing against the a range of indicators during 2014-15 - the fourth year they have reported information in this way, following Ofwat’s  decision in 2012 to change the way that companies report. The indicators are measured in the following five areas:

• Customers
• Environmental impact
• Reliability and availability
• Financial
• Board leadership, transparency and governance

On customer service, the analysis shows that in 2014-15, the companies scored an average of 82 out of 100 for customer service. This ranged from 88 (Bournemouth) to 75 (South West). In 2013-14 the average score was 82 – ranging from 89 (South Staffs Water) to 71 (Thames). Each company’s customer service score is based on the number of customer enquiries and complaints they receive (‘customer contacts’) – and how satisfied customers were with the way the company dealt with them.

The number of complaints received by the Consumer Council for Water (CCWater) increased slightly from 9,957 to 10,138 last year. This follows a long-term trend for falling numbers of complaints received by CCWater (from a peak of almost 18,000 complaints in 2009-10) and received by companies (from more than 250,000 complaints in 2007-08 to 123,218 complaints in 2013-14).

Ofwat  watching to see risk of sewer flooding is kept "as low as possible"

The number of properties flooded from overflowing sewers decreased (from 2,190 in 2013-14 to 1,551 in 2014-15). Ofwat said that although sewer flooding decreased, companies are still taking action to further improve their performance and it would watching to see that companies continue to maintain and operate sewers to keep the risk of sewer flooding as low as possible.

Customer contacts and satisfaction form part of Ofwat’s  service incentive mechanism (SIM -  all companies’ performance was satisfactory in 2014-15. Performance in the three years 2011-12, 2012-13 and 2013-14 was taken into account in PR14 to set prices the companies during 2015-20. Ofwat penalised the poorest performers during 2010-15 were and rewarded the best, delivering an overall net penalty of £79m.

On environmental impact indicators, Ofwat said the company reports and data from the quality regulators showed there were significantly fewer serious pollution incidents caused by water company sewerage assets last year. At an industry level there were around two incidents for every 10,000km of sewer in 2014 compared with around three incidents for every 10,000km in 2013. There was also a decrease in less serious incidents with 71 for every 10,000km in 2014 compared with 83 for every 10,000km in 2013. However, South West Water’s and Southern Water’s performance were both categorised as significantly below target or expectation for sewerage pollution incidents , with Southern Water also in the same category for serious pollution incidents

Carbon emissions - Anglian and Thames below target

On greenhouse gases emissions, the companies reported that together they emitted the equivalent of about 4 million tonnes of carbon dioxide in 2014-15 - about the same as the previous year. Anglian Water and  Thames Water were both ranked in the category identifying performance as significantly below target or expectation.

Where companies have identified issues with their performance or fail to deliver the agreed environmental performance, Ofwat will either follow these up to make sure they get back on track, or together with the Environment Agency consider what action needs to be taken to protect the environment and customers’ interests.

On the companies' performance in terms of reliability and availability in 2014-15, the analysis shows that all of the companies met their targets for reducing water leaks from their networks. The overall level of leakage, although marginally higher than in 2013-14, was still around its lowest level since records began in the early 1990s.

The water companies have told Ofwat that overall they maintained their assets to a sufficient standard in 2014-15.

Servicability - deteriorating performance in some areas for three firms

However, in terms of serviceability to maintain assets such as water and sewerage treatment works, and underground networks of water mains and sewers, performance was ranked as deteriorating for the following three companies:

• Severn Trent Water  - Serviceability water non-infrastructure
• Thames Water - Serviceability sewerage infrastructure
• Dee Valley - Serviceability water infrastructure

Severn Trent’s performance for serviceability sewerage infrastructure was also separately assessed as marginal.

The analysis says that companies that had less than stable (‘marginal’ or ‘deteriorating’) serviceability are seeking to restore assets to stable serviceability. Ofwat reviewed their progress with these action plans as part of the 2014 price review which included clawing back £149m for customers where companies had not restored their performance.

The regulator said it will also assess next year whether there is a case to claw back any further money for customers, following a review of all company data from 2014-15.

On companies' performance in terms of board leadership, transparency and governance for 2014-15, Ofwat said that it was pleased that companies are meeting its principles “with a few limited exceptions.”

The analysis says that Ofwat’s review of companies’ annual reports and regulatory accounts for 2013-14 showed that companies were making good progress towards meeting the principles and that there had been a further improvement in 2014-15 reporting as companies moved towards fully meeting the principles building on the previous year’s improvements.

Ofwat "disappointed" some companies have not set group structure out clearly

The analysis flags up that in several cases companies’ websites are lacking in detail on governance or information is hard to find. Commenting on the principle that  group structure must be explained in a way that is clear and simple to understand, Ofwat said:

“Most but not all companies have provided a group structure diagram and explained the role of the companies within that structure. We are disappointed that not all companies have done this even where they have undertaken to do so in their individual governance codes.”

Click here to access Ofwat’s performance reporting analysis