English and Welsh water firms could be forced to return £107m via lower bills
Yorkshire and Thames among providers facing penalties for missing performance targets, but bills could rise elsewhere Business live – latest updates Thames Water, Yorkshire Water a
By The Guardian
Households in England and Wales could see water bills reduced after Ofwat proposed penalties for companies that missed environmental and customer service targets during the 2025-26 financial year.
The regulator’s draft plans would deliver a net £240 million reduction in customer bills by 2029-30. Of that total, £107 million is expected to be returned to customers through bills in 2027-28.
Yorkshire Water faces the largest proposed deduction, with £75 million due to be taken from bills in April 2027. Thames Water faces a proposed £46 million reduction.
Ofwat estimates the average Yorkshire Water customer could see bills fall by £27, while the average reduction for Thames Water customers could be £7. The actual impact will vary depending on the supplier and customer type.
The proposed payments are linked to companies missing agreed performance targets, including measures covering environmental performance, leakage and customer service. The system reduces the amount companies can recover from customers when they fall short, while providers that perform better can receive rewards.
Some water customers may see little overall benefit because Ofwat has also approved plans allowing companies to raise annual tariffs by an additional £3.4 billion. That comes on top of an average 36% increase already agreed over the five years to 2030.
The figures are provisional. Ofwat is due to publish its final decisions on the performance payments by 15 December, with the changes expected to take effect from 1 April 2027.