Tuesday 27 November 2018

Ofwat: Customer compensation should go up if taps run dry

Ofwat is proposing an increase in compensation payments to householders if they are left without water supply.

It is part of the water regulator’s overhaul of the compensation arrangements for customers, which aim for them to be “fairer, faster and more hassle free”.

Currently, the Guaranteed Standards Scheme (GSS) entitles household customers to £20 after 12 hours without supply and a further £10 for every additional 24 hours they do not have water.

Ofwat is proposing it should be increased to £30 for every 12-hour period they are left without supply and customers who don’t have water for two days should receive £120.

It also says customers should receive compensation at “more regular intervals” when they’re left without water – every 12 hours, rather than 24 and all payments should be sent out automatically so customers no longer have to submit claims.

The proposals come on the back of Ofwat’s review into water companies’ handling of the ‘Beast from the East’ earlier this year which left more than 200,000 customers across England and Wales without water supply for more than four hours, more than 60,000 for 12 hours and 36,000 for above 24 hours.

Chief Executive Rachel Fletcher said: “Being left without a crucial public service like running water causes disruption and hardship and compensation arrangements should reflect the impact on people’s lives. The reforms we are proposing today will aim to ensure that compensation for future supply interruptions is fair, fast and free from hassle.

“As the mercury begins to fall once again, we expect all water companies to have learned serious lessons from this year’s ‘Beast from the East’ and to be better prepared to look after their customers whatever the weather brings.”

Ofwat has also written to Thames Water, Severn Trent, Southern Water and South East Water, which were asked to provide a detailed, externally audited action plan setting out how they are addressing the issues identified in its review.

Consumer Council for Water (CCWater) said water companies "cannot afford to repeat the same mistakes which made life more difficult for consumers than it needed to be".

Chief Executive Tony Smith added: "We welcome the move to boost compensation but the most important thing is making sure all consumers – including those in vulnerable circumstances – get the support they need during any supply disruption. That includes good communication and extra help accessing emergency water where it’s needed. Ultimately companies will be judged on how well they handle the next major incident – if they come up short again we will expect the regulator to hit them hard.”

Additional Information

In February and March 2018, the quick thaw that followed the ‘Beast from the East’ left many customers in England and Wales with little or no water. In response, we launched a review that culminated in Ofwat's June report ‘Out in the Cold’. Its report found water companies need to ensure they will be better prepared, better at responding and better at talking to their customers.

All companies published responses to the report at the end of September. Four companies - Thames Water, Southern Water, Severn Trent Water and South East Water - were required to submit externally assured detailed action plans.

Where Ofwat has seen progress

• Companies are collaborating with more key partners, including resilience forums, local authorities and emergency services.
• Companies are collaborating with each other, showing a commitment to best practice sharing.
• Some companies have tested their approaches during the hot summer, incorporating the lessons they’ve learned since winter.
• Companies have worked to improve their stocks of bottled water.

Where more progress is needed

• Ofwat is concerned some companies have more work to do to be ready for winter. It has written to companies to let them know where they need to improve and what happens next.
• There needs to be a vast improvement in the way wholesalers interact with retailers.
• Companies need to be thinking more carefully about identifying and supporting customers in vulnerable circumstances.
• Water UK needs to do more to co-ordinate and lead the work to push the sector onwards, and companies need to make it a priority to work collaboratively.

What happens next?

Water companies have a duty to take responsibility for preparing for and managing what happens during extreme weather to make sure customers are protected.

• The sector – Ofwat has asked Water UK to drive the sector’s work forward.
• Defra – It has agreed with Defra, which oversee the Security and Emergency Measures Direction (SEMD) that issues identified in our reviews should be considered as part of the SEMD certification process this winter.
• Ofwat – The regulator will focus on its role of holding companies to account. It isn't rubber stamping plans or initiatives and will be watching closely to see that companies deliver.