The Environment Agency (EA) is warning that the environmental performance of some of the nine water and sewerage companies in England companies is giving “serious cause for concern”.

Environment Agency Chair Emma Howard Boyd was commenting in the EA’s annual reporting for 2020 on the environmental performance of the 9 water and sewerage companies, which includes individual companies'  Environmental Performance Assessment (EPA) data.

Despite the warning, the report says that the results show that for the first time over half the sector has achieved the highest rating (industry leading status, 4 stars) - of those Wessex Water, United Utilities and Severn Trent Water have sustained industry leading performance for most of the 5 year period. Northumbrian and Yorkshire Water had also shown improvements based on a range of measures including pollution incidents, and compliance with permits.

However, the performance of some companies was a serious cause for concern, with Southern Water and South West Water remaining at the bottom of the table.

"Still a tendency for some water companies to reach for excuses rather than taking action to reduce serious pollution incidents to zero"

The EA Chair commented:

“South West Water has received a 2 star rating for the entire 5 years of the EPA and this drags down the whole sector’s reputation. Anglian and Thames Water have not shown significant improvement over the past 5 years, and more than half of all serious incidents in 2020 were from the assets of these 2 companies.”

“When under pressure on the issue of pollution, there is still a tendency for some water companies to reach for excuses rather than taking action to reduce serious pollution incidents to zero. Last week’s record £90 million fine against Southern Water for causing 6,971 unpermitted sewage discharges, shows that fines for environmental offences are starting to reach the same level as the highest fines for crimes in financial services. No one should profit from undermining environmental laws.”

Water quality - “bottom line is England’s rivers are too polluted”

She also said that while there had been significant improvements in water quality over the last 20 years, “the bottom line is England’s rivers are too polluted.”

The Government’s 25 Year Environment Plan aims for at least three quarters of waters to be close to their natural state – currently only 14% of rivers achieve this. The main sources of pollution are:

• agriculture and rural land management (40%)
• the water industry (35%)
• urban and transport (18%)

Around 32% of water bodies are failing good ecological status due to discharges from sewage treatment works, compared to 7% which are failing due to storm overflows - “we want to see substantial improvements on both” Emma Howard Boyd continued, commenting:

“True change depends not only on deterrence actions but also corporate culture inspired by shareholders. At present, a number of water company chairs and chief executives are relatively new to post. Most have expressed a wish to improve their company’s environmental performance. We look to them to turn those promises into action.”

“Some water companies’ stakeholders will find much to celebrate in this report, some will most certainly not. We look forward to continuing to work with companies that are truly committed to enhancing the environment and will not hesitate to hold those that don’t to account.”

Key findings in the report for 2020 include:

• 5 companies, the most ever, achieved the industry leading EPA rating (4 stars) – we were clear what was required and these companies have shown it is possible to meet environmental targets
• Severn Trent Water, United Utilities and Wessex Water sustained strong performance, achieving industry leading status (4 stars) at least 3 times in the last 5 years
• serious incidents (category 1 and 2) declined for the second year in a row and were at the lowest number ever – however the sector as a whole needs to accelerate to zero serious incidents
• 99.2% of sewage treatment works (STW) and water treatment works (WTW) were compliant with permit conditions for discharging treated waste water – this is the highest number ever of treatment sites (not storm overflows) meeting pollutant numeric limits set to protect the environment
• the total number of pollution incidents (category 1 to 3) was less than in 2019, but the second highest number since 2015
• incident self-reporting at 77% was lower than the record high of 80% in 2019 – but this was still the second highest rate of self-reporting in the period 2011 to 2020
• Southern Water and South West Water rated as requiring improvement (2 stars) – the EA said their performance has been consistently unacceptable during the last 5 years
• Southern Water and South West Water were significantly below target (red) for the EPA sewerage incidents metric – South West Water for the tenth year in a row
• South West Water was the only company significantly below target (red) for the EPA serious incidents metric – but over half of serious incidents were due to Anglian Water and Thames Water
• 98.2% of planned environmental improvement schemes were completed against Asset Management Plan (AMP) targets, with 3 companies failing to fully meet their deadlines
• Anglian Water and South West Water failed to achieve a score of 100 for the Security of Supply Index (SoSI) for water availability

Impacts of COVID-19

The report says that during 2020 the Agency had recognised that COVID-19 caused unusual demands on sewerage and clean water services, and that water companies faced operational restrictions due to government advice.

To help them cope with the disruption, the EA enabled companies to apply for local enforcement positions (LEPs) where compliance with a permit was temporarily compromised.

The Agency said it had granted 8 LEPs for 2 water companies (Anglian Water and United Utilities) – both companies had supplied evidence to show that permit failures at Sewage Treatment Works were due to circumstances only arising out of COVID-19.

Improving water company performance

The report says that while there have been some individual company and sector performance improvements in 2020, during the last 5 years the sector “has been unable to consistently meet” the targets set by the EA. “All companies need to take responsibility to tackle specific performance issues. We also want the sector to work more collaboratively and achieve improvement at a greater pace.”

Actions undertaken by the Agency during the course of 2020 included:

• made sure all companies publish a pollution incident reduction plan (PIRP) for them to better understand their risks and implement interventions to reduce incident numbers – the EA will continue to track progress to make sure action is timely and effective
• written to and engaged with water companies at Chair and Executive Director level to set out the challenge and push for individual company and sector improvements
• worked with Ofwat to better align the financial penalties that they impose with the EA’s environmental performance metrics
• continued to use enforcement and sanctions on water companies that failed to uphold the law or caused serious environmental harm
• worked with Defra to develop new duties for managing storm overflows to be added by government amendment to the Environment Bill – this will require government to publish a plan to reduce storm overflow discharges and report progress to Parliament, and water companies must publish data annually
• been a key member of the national Storm Overflow Taskforce to set a long term goal to eliminate harm from storm overflows
• worked with Defra to develop statutory duties (in the new Environment Bill) for water companies to produce DWMPs – to understand and target improvements in network capacity that will reduce both surface water flooding and pollution while enabling growth and development

EA will apply “even greater scrutiny to companies that have been consistently poor performers”

Looking to the future, the EA says in the report that the sector had not met the performance expectations for 2015 to 2020 which the Agency set out in 2013 and that water companies still needed to make and sustain substantial improvements. No company had achieved all the expectations set out for the period 2015 to 2020, which was “very disappointing.”

“We will continue to push improvements across the sector,” the report says.

According to the EA, performance is not good enough and there are opportunities for even the best performing companies to further improve. The regulator expects all companies to make improving performance a priority and promote best practice.

“ As the environmental regulator we are prioritising and focusing our resources where they will have the greatest influence on water company performance.”

“We recognise that where significant investment is required, improvements cannot happen overnight. But we will continue to use our influence and regulatory powers to require water companies to make timely, necessary and achievable improvements.”

The EA now intends to apply “even greater scrutiny to companies that have been consistently poor performers.”

Water UK  - "we need government and regulators to work with the water industry on ensuring rivers get the investment they need"

Commenting in response to the report, Christine McGourty, Chief Executive of Water UK, said:

“This year’s Environmental Performance Assessment shows a record 5 companies in England achieving the highest possible 4-star rating for their environmental performance, while serious pollution incidents have also fallen to their lowest level ever. This means that the majority of water and sewerage companies are now defined as ‘industry leading’ by their independent environment regulator, a significant step forward and a reflection of the commitment and focus that water companies place on protecting and enhancing the environment.

“Companies are investing a further £5 billion on environmental improvements over the next few years. That includes work on storm overflows, investment in wastewater treatment works, and using natural alternatives and the latest technology to keep sewage out of rivers and take pressure off wastewater networks.

“Looking ahead, we need government and regulators to work with the water industry on ensuring rivers get the investment they need to achieve and sustain the best possible water quality.”

Click here to access the report online