The decision, which was made following an evaluation of their performance against set targets for the fiscal year 2022/23, will result in reduced water bills for customers in the upcoming year.
Water companies operating within England and Wales were assigned ambitious targets for the period from 2020 to 2025, aimed at delivering improved outcomes for both consumers and the environment.
When companies fall short of these objectives, Ofwat reduces the amount they can charge customers.
This development coincides with the release of Ofwat’s annual Water Company Performance Report.
The report assesses companies based on various key metrics, including pollution incidents, customer service and leakage.
According to Ofwat, no company received a ‘leading’ rating in this year’s report.
The report categorises ten companies as ‘average,’ with an additional seven falling into the ‘lagging’ category.
Furthermore, the Water Company Performance Report evaluates company performance over the three years since the commencement of the current regulatory cycle, which covers the period from 2020 to 2025.
During this time, companies demonstrated improvements in areas such as leakage reduction and mitigating internal sewer flooding.
Notably, all but one company met the performance standard for unplanned water outages last year, according to the report.
However, despite these improvements in select areas, progress across the industry has been characterised as “slow”.
In the fiscal year 2022/23, fewer than half of the companies achieved their performance targets concerning pollution incident reduction and leakage.
This underperformance is mirrored by an overall decline in customer satisfaction over the past year.
Additionally, Ofwat’s report reveals that most companies have not fully utilised their allocated funding for delivering service enhancements between 2020 and 2023.
David Black, Ofwat Chief Executive Officer said: “The targets we set for companies were designed to be stretching – to drive improvements for customers and the environment.
“However, our latest report shows they are falling short, leading to £114 million being returned to customers through bill reductions. While that may be welcome to billpayers, it is very disappointing news for all who want to see the sector do better.”