Welsh Water escapes misreporting penalty after more than making it up to customers

Ofwat has imposed a nominal penalty of £1 on Welsh Water after accepting its undertakings in respect of leakage and per capita consumption misreporting over a period of five years.

Welsh Water’s own assurance processes initially identified concerns after an internal review concluded that elements of its calculations on PCC and leakage for the years 2020-2022 did not comply with regulatory requirements.

Ofwat said accepting Welsh Water’s undertakings would provide greater benefits to customers than imposing a material financial penalty. The company’s customer redress measures “equate to £30m (the equivalent of 9% of Welsh Water's relevant turnover). This is greater than Ofwat would have been minded to impose as a financial penalty [it said this would have been 4.5% of relevant turnover, or £15m], and a direct benefit to customers. In addition, Welsh Water will return to customers £8m in ODI underperformance payments for 2020-22, and commit to £33.6m of additional spend by the company to deliver leakage and PCC improvements during AMP7.

“In total we consider the package of commitments put forward by Welsh Water to be valued at least £73m in terms of benefits for customers.”