Watchdog blasts water on environmental performance and questions dividends

Environment Agency chair, Emma Howard Boyd, promised to ratchet up regulation and questioned the legitimacy of dividend payments at under-performing water companies as she published a report on the sector’s 2018 green performance this month.

The chart shows how each of the large water and sewerage companies performed last year. In terms of sector wide trends, the Agency highlighted that performance deteriorated in 2018 which reversed the trend of gradual improvement in the sector since the rating system began in 2011. It also said serious pollution incidents increased in 2018 causing damage to rivers and wildlife.

The agency’s key messages on individual companies included:

• Northumbrian Water was the only company to achieve the highest rating of 4 stars and the only company to improve its performance on the previous year;

• Severn Trent Water, United Utilities and Wessex Water dropped from 4 stars to 3 stars, with Anglian Water and Thames Water remaining on 3 stars;

• Southern Water, South West Water and Yorkshire Water were only given 2 stars and described as demonstrating an "unacceptable level of performance";

In response, the EA said it would put increased focus on financial penalties and launch a new programme called ‘Improving Water Company Performance’ to tackle poor performing company behaviours and improve how the Agency regulates water companies.

Howard Boyd (pictured) also took a new tack, challenging under-performing firms to consider whether they should be taking a dividend. She said: “Ofwat has been clear that companies need to consider the issues that matter for their customers and wider stakeholders, and take these factors into account when deciding dividend payments to their shareholders. Companies should be reflecting on their environmental performance and long-term resilience, if this is poor they should be asking themselves whether dividends are justifiable.”