Millions of customers to get up to £2,000 in water bill compensation under first shake-up in DECADES
MILLIONS of water customers are set to benefit from huge hikes to compensation levels for the first time since 2000.
New regulations from the Department for Environment, Food and Rural Affairs (Defra) will mandate water companies to provide higher, compulsory compensation to both customers and businesses.
Compensation is typically offered to homes and businesses impacted by issues such as supply interruptions, sewer flooding, and low water pressure.
However, the current compensation rates have remained unchanged since the turn of the millennium.
Under the new rates, some customers will be eligible to receive £2,000 automatically if they are affected by a sewage flood, an increase from the current £1,000.
Issues such as low water pressure could see payments rise to a whopping £250, compared to the current £25.
Following a supply interruption in South Staffordshire last month due to a burst water main, compensation for residents was not compulsory.
However, under the new regulations, this incident could have warranted payments of £150 for households and £300 for businesses.
The government will also broaden the scope where compensation becomes mandatory.
For example, compensation will now be required for any households issued with boil notices, typically given when drinking water quality falls below safe levels.
Compensation will also be due when water suppliers fail to conduct meter readings or installations as scheduled.
These changes, which follow a public consultation showing overwhelming support, aim to hold water companies accountable and improve service quality.
Environment Secretary Steve Reed stated that these measures aim to provide better compensation for customers who have been “too often let down by water companies.”
He said: “We are clear that the public deserves better compensation when things go wrong, so I’m taking action to make sure that happens.
“This is another step forward in our plans to reform the water sector so it serves customers and the environment better.”
The reforms have been welcomed by consumer groups, such as the Consumer Council for Water (CCW), who believe the increased payments and expanded scope will incentivise water companies to improve their services.
What compensation is increasing?
COMPENSATION for several common problems will see substantial increases:
- Low water pressure: Payments could reach £250, a tenfold increase from the current £25.
- Internal sewer flooding: Compensation could exceed £2,000, compared to the current maximum of £1,000.
- Supply interruptions: Households could receive £150 and businesses £300, as exemplified by a recent incident in South Staffordshire.
- “Do Not Drink” notices: A compulsory payment of £220 for households and £440 for businesses would be triggered, unlike the voluntary £30 offered by Thames Water to residents in Bramley, Sussex, earlier this year.
- Water quality incidents: Customers affected by incidents like the cryptosporidium outbreak in Brixham, Devon, could receive at least £10 per 24 hours, potentially totalling over £500 for extended events.
Mike Keil, chief executive of the CCW, said: “The increased payment levels when things go wrong, alongside fewer reasons for companies to avoid making payments, means that there are far greater incentives for water companies to get things right the first time.
“The overhaul of these standards marks a step forward in improving consumer protection and repairing fractured trust in the water sector.”
It’s worth bearing in mind that the changes are expected to come into force next year once the legislation has been passed.
They’re part of a larger government plan to overhaul the water sector, including stronger regulations and potential criminal liability for water company executives who break the law.
COMPENSATION ALREADY DUE
At the beginning of October, water companies were ordered to return £157.6million to customers after failing to meet pollution targets.
Each year, Ofwat evaluates the performance of England and Wales‘ 17 largest water and wastewater companies against key targets, including sewer flooding, supply interruptions, and water leaks.
For the second consecutive year, no company attained the highest rating, although four companies demonstrated improvement compared to the previous year.
As a result, millions of customers at 13 water companies will see their bills slashed next year as the watchdog issues fresh penalties.
The penalties for each water firm are as follows:
- Thames Water £56.8million
- Anglian Water: £38.1million
- Yorkshire Water: £36million
- Southern Water: £31.9million
- Welsh Water: £24.1million
- South West Water: £17.4million
- South East Water: £8million
- Wessex Water: £5.3million
- Affinity Water: £5.2million
- Bristol Water: £1.9million
- Portsmouth Water: £1.1million
- South Staffs Water: £700,000
- Hafren Dyfrdwy: £200,000
The regulator said that the exact amount that will be returned to customers will be finalised on December 19 and applied to bills from April 2025.
Water companies were set stretching targets for 2020-25 to deliver better outcomes, for both customers and the environment.
Where they fall short on these, the regulator imposes performance penalties resulting in customers being charged less than they would be the following billing year.
Performance penalties have totalled more than £430million since 2020.
Last year, Ofwat forced through bill reductions worth £177.6million.
On Thursday (December 19), Ofwat will confirm how much water companies are allowed to hike bills over the next five years.
In October, water companies requested increases of 40%, adding an extra £176 to a typical household’s costs and bringing the total to £615 per year.
The regulator said at the time: “We will consider this additional expenditure request as part of our final determinations.”
What water bill support is available?
IT'S always worth checking if you qualify for a discount or extra support to help pay your water bill.
Over two million households who qualify to be on discounted social water tariffs aren’t claiming the savings provided, according to the Consumer Council for Water (CCW).
Only 1.3million households are currently issued with a social water tariff – up 19% from the previous year.
And the average household qualifying for the discounted water rates can slash their bills by £160 a year.
Every water company has a social tariff scheme which can help reduce your bills if you’re on a low income and the CCW is calling on customers to take advantage before bills rise in April.
Who’s eligible for help and the level of support offered varies depending on your water company.
Most suppliers also have a pot of money to dish out to thousands of customers who are under pressure from rising costs – and you don’t have to pay it back.
These grants can be worth hundreds of pounds offering a vital lifeline when faced with daunting water bills.
The exact amount you can get depends on where you live and your supplier, as well as your individual circumstances.
Many billpayers across the country could also get help paying off water debts through a little-known scheme and even get the balance written off.
Companies match the payments eligible customers make against the debt on their accounts to help clear it sooner.
If you’re on a water meter but find it hard to save water as you have a large family or water-dependent medical condition, you may be able to cap your bills through the WaterSure scheme.
Bills are capped at the average amount for your supplier, so the amount you could save will vary.
The Consumer Council for Water estimates that bills are reduced by £307 on average through the scheme.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories