Welsh Water faces a £40 million payout following an investigation by Ofwat, Britain’s water regulator.
Ofwat’s probe found that the company had misrepresented its performance data concerning leakage and per capita consumption (PCC), leading to inaccurate reporting over five years.
This misrepresentation, attributed to a severe lapse in governance and management oversight, notably downplayed the company’s actual performance.
As part of the enforcement measures, Welsh Water will allocate £39.4 million for customer redress, with £15 million already committed and an additional £9.4 million slated to follow.
This compensation aims to alleviate the impact of the company’s failures on its customers, potentially leading to reduced bills.
Moreover, Welsh Water will absorb an extra £15 million in costs, sparing customers from further financial burden.
Welsh Water has also committed to addressing its leakage and PCC performance by investing an additional £59 million during the current price review period (2020-2025).
David Black, Chief Executive Officer at Ofwat said: “We need to invest tens of billions of pounds over the next 30 years to reduce pollution and ensure that our water infrastructure can grow with our population and adapt for climate change.
“Customers and investors will only agree to fund this if they trust water companies to provide accurate information about their performance.
“For five years, Welsh Water misled customers and regulators on its record of tackling leakage and saving water. It is simply indefensible and that is why we are making Welsh Water pay this £40m to benefit its customers.”
Pete Perry, Welsh Water Chief Executive said: “We are very sorry that this happened. We proactively brought this issue to Ofwat’s attention in April 2022 having identified it as part of our annual performance assurance process.
“Ofwat’s key conclusions as to what went wrong align with our own investigations that were shared with Ofwat together with our proposals for customer redress and additional investment to tackle leakage and per capita consumption. Rebates have already been made to 1.4 million customers.
“Our review identified governance and management oversight failures that led to the issues identified which have now been addressed.
“Achieving the planned reduction in leakage will be challenging, but we have committed a substantial increase in expenditure in this area and strengthened the relevant operational teams to recover performance.”
