UK water industry regulator Ofwat is considering whether there is a possible link between a rise in the number of pollution incidents that the water companies reported during 2011-12 and how well the companies are managing, maintaining and operating their underground networks.
The concern comes in a new report published by Ofwat summarising the overall performance of the water and sewerage and water only companies in England and Wales during 2011-12, together with details of action it is taking as a result.
Ofwat said the latest report is part of its new approach to accountability following its decision in spring 2012 to change how the companies are held to account. In July 2012, the water and sewerage and water only companies in England and Wales published new information showing customers how they are performing in delivering services to customers and the environment.
Ofwat has highlighted environmental performance - pollution incidents in particular - as the one area where a number of companies have reported problems.
Under the new report requirements, the companies are now measured against four key parameters – customer experience, environmental impact, reliability and availability and financial. Performance is then benchmarked against a number of criteria, including:
- The company's performance is in line with or better than expected
- The company's performance is not in line with expectations but performance has slipped only slightly
- The company's performance is significantly below target or expectation
The key area where Dwr Cymru, Northumbrian Water, South West Water, Southern Water and Yorkshire Water have been as significantly below target is on pollution incidents under the environmental impact category. South West Water is also under-performing on discharge permit compliance.
As a result of a number of companies reporting issues with their environmental performance, Ofwat is concerned that a rise in the number of pollution incidents that the companies reported during 2011-12 may be linked to how well the companies are managing, maintaining and operating their underground networks.
The Environment Agency recently reported that the number of serious pollution incidents caused by water companies increased from 65 in 2010 to 120 in 2011.
Ofwat is now giving further consideration to whether there is a possible link between companies' maintenance of their assets and environmental pollution and whether it needs to take any action. The regulator will publish an update if it decides to take further action and said that if companies fail to deliver the agreed environmental performance, together with the Environment Agency it would consider what action was needed to protect the environment and customers’ interests.
No action planned on financial and other issues
In general, companies reported that they delivered good levels of service to most customers in 2011-12. Under Ofwat’s new approach, the information that companies publish should be accessible for customers. 2011-12 was the first year that companies did this, and they used a variety of approaches. However, customers who want to submit feedback on the information a company publishes – or the format –are being told that they should contact them directly, rather than Ofwat, which the regulator says will help them improve.
On customer experience, in 2011-12, the companies scored an average of 75 out of 100 for customer service. This ranged from 85 ‒ Affinity Water East (formerly Veolia East), Bristol Water, Sembcorp Bournemouth Water and Wessex Water ‒ to 56 (South East Water).
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. For the fourth year in a row written complaints that the companies received fell - by more than 22,000 last year.
Ofwat commented that customers are generally satisfied with the service they received in 2011-12 – accordingly, the regulator is not taking any further action against any company in this area.
On financial performance, compared with 2010-11, the companies’: revenue from customers increased by 4.8% to £10.5 billion – but stayed the same in real terms after inflation is taken into account. Overall pre-tax profits were down by £285 million this year, at £1.72 billion – however, dividend payments to shareholders were £643 million (or 42%) higher at £2.16 billion. This included £152 million of dividends related to the previous year, and one-off payments of special dividends of £302 million.
Ofwat is not planning to take any action in relation to financial issues, saying that no companies have identified any problems in this area.
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