Ofwat ranks firms on service delivery and financial resilience

Some water companies are “letting down their customers, and the environment” Ofwat said last week when it published its Water company performance report (previously known as the Service delivery report) and its Financial monitoring report, both for 2021-22.

Operational performance

On operational performance, Ofwat classified the companies as follows.

Leading

Severn Trent Water remained in this category for the second year in a row. South Staffs Water and Bristol Water improved performance and moved up from the average.

Average

South East Water and SES Water both improved performance to move into this category from the lagging category last year. Anglian Water and Portsmouth Water fell from the leading category last year to average. Ofwat pointed out that Wessex Water met the majority of its performance commitments but was not included in the leading category as it is subject to a live enforcement case alongside five other firms. Affinity Water, Hafren Dyfrdwy and United Utilities all remained in the average category from last year.

Lagging behind

Southern Water and Thames Water remained in the bottom category from last year. Yorkshire Water, Northumbrian Water, South West Water and Welsh Water fell into ‘lagging behind’.

Sector wide, Ofwat said there was good performance on leakage, mains repairs and unplanned outage performance commitment levels, but an increase in serious pollution incidents, lower levels of customer satisfaction and missed per capita consumption targets.

Financial resilience

On financial resilience, Ofwat classified the companies as follows.

Standard (no specific concerns; no action required; routine monitoring): Anglian, Bristol, Welsh, Hafren, Severn Trent, South Staffs, South West, United Utilities, Wessex.

Elevated concern (some concerns, action may be required, more frequent or targeted monitoring): Affinity, Northumbrian, South East.

Action required (action required or being taken; close monitoring): Portsmouth, SES, Southern, Thames, Yorkshire.

Regarding the bottom category, Ofwat noted Thames, Southern and Yorkshire took positive steps in the year, driven by Ofwat intervention, and that they are now expended to demonstrate delivery of their commitments to improve.

On Portsmouth, the regulator said the company’s placement “reflects largely the scale of the Havant Thicket reservoir undertaking relative to RCV and its complexity. Given the potential for such a significant project to impact on financial resilience, we have additional monitoring and company engagement in place.”

On SES, Ofwat said: “Matters include a weakening trend across certain key financial metrics coupled with a lower credit rating. SES has implemented new systems to improve performance, but the impact of these changes in not reflected in the 2021-22 financial statements.”

Ofwat chief executive, David Black, remarked: “In too many areas, water and wastewater companies are falling short when it comes to looking after customers, the environment and their own financial resilience. We are clear; these companies need to address this unacceptable performance as a matter of urgency. For some companies poor performance has become the norm. This cannot go on.”

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