Star rating system and ‘no impact’ pollutions to go under EPA shake-up

(by Karma Loveday)

Stars will be swapped for number ratings under a revamp of the Environmental Performance Assessment (EPA) system, that will also see pollution incident numbers appear to increase. This has been justified by Defra and the Environment Agency on the basis of taking a tougher stance on pollution and increasing transparency. 

The Agency has published details of previously consulted on (in October to December 2024) changes to the EPA for 2026-30. The current 1 to 4 star system applied to water and sewerage company environmental performance will be replaced by the following numeric rating system:

• 5 – excellent (effective from 2028 – see below) 

• 4 – good

• 3 – fair

• 2 – requires improvement

• 1 – failing

Companies are expected to be rated 4 consistently. They will exceed expectations if they achieve the newly introduced 5th rating. This will apply to data collected from 1 January 2026, with the first report under the new rules to be released in 2027. 

Company ratings will be informed by their performance across ‘live’ EPA metrics, each of which will be RAG rated –  red (significant improvement required) / amber (some improvement required) / green (on track) – all in relation to Water Industry Strategic Environmental Requirements expectations. The table shows the RAG performance required of companies by numeric level. 

Some of the metrics are ‘core’ (see below) and the number of metrics in play will increase during the 2026-30 period as shadow metric development work and data assessments for thresholds conclude. 

There are two shadow metrics initially: 

• Abstraction and impounding licence compliance (England only) 

• Wastewater treatment works flow to full treatment annual numeric permit limit compliance.

Importantly, the 5th (excellent) rating won’t be in play until a crucial metric on ‘total pollution incidents’ has live RAG thresholds, which will be from the 2028 data year. Data on total pollutions will be collected from 2026, but the RAG ratings will not be applied (and companies’ overall EPA ratings not affected) until 2028, when several years of data will be available. 

The Agency explained that is because of changes being introduced to total pollution counting under new Water Industry Regulation Incidents (WIRI) Guidance, which was also published last week. The key changes in the guidance were:

• The addition of dry day spill data, which is now identifiable via Event Duration Monitors (EDM) on storm outflows. 

• The removal of water companies’ ability to use ‘no impact’ claims to have category 3 water pollution incidents downgraded to category 4 incidents.  Any pollution entering waters will now be categorised as a category 3 (minor impact) as a minimum.

• A requirement for water companies to report all water pollution incidents,  no matter how small. 

The following metrics will have live RAG thresholds from 2026 onwards: 

• Serious incidents affecting water*  (category 1 and 2)

• Self-reporting of incidents affecting water (category 1 to 3)

• Discharge permit compliance with numeric conditions*

• Discharge permit compliance with descriptive conditions

• Storm overflows EDM operation

• Satisfactory sludge use and disposal

• Water Industry National Environment Programme and National Environment Programme in Wales scheme delivery*

• Water resources scheme delivery. 

(* = core metrics. Total pollution incidents will also be a core metric once it goes live. To achieve a rating of 3, core metrics must not be red.)

The application of the new arrangements in Wales by Natural Resources Wales will be broadly consistent with the approach in England, but some details will differ. 

Water minister Emma Hardy commented: “We are taking firm action to clean up our rivers, lakes and seas. The old rating system for incidents was too complex and opaque. This new approach is clear, transparent, and leaves no room for doubt. Water companies, regulators and the public will now have a much sharper view of progress and we will hold them to account every step of the way.”