Water companies will return £193 million to customers during the next year for missing performance commitments, Ofwat has confirmed.
That is some £43 million less than the regulator had previously ruled would be returned when it made its draft determination in September.
The decrease accounts for payments that have been deferred as well as tax allowances and “bespoke” adjustments being implemented.
Ofwat calculated the rate of penalties and rewards on the back of an annual company performance review, published in September, and its financial resilience report that came out last month.
The regulator confirmed that in-period rewards and penalties will be adjusted with rewards of £123 million earned across the industry during 2022-23.
While five companies earned rewards from their annual targets, 12 were penalised for not meeting key targets on common outcome delivery incentives (ODIs).
Thames will repay its customers the biggest amount during the next year. The company will reimburse customers through their bills to the tune of £73.8 million.
That is £26 million lower than Ofwat had calculated in its draft determination. The regulator said the adjustment was “due to 0% tax being applied and bespoke adjustments”.
Meanwhile, Southern will repay just under £21.5 million this year after successfully applying to defer half of its £42.9 million penalty until the 2025-26 financial year.
At the other end of the scale, Severn Trent earned £89 million in outperformance payments.
Meanwhile, both Severn Trent and South Staffs had Green economic recovery funding of £30.1 million and £760,000 from 2021 added to their respective in-period totals.
The regulator’s review of the 12 months to April 2023 highlighted that Ofwat deemed Affinity, SES, Bristol, Southern and Thames were materially non-compliant with the agreed methodology for calculating leakage. Per capita consumption (PCC) performance will be determined at the end of the 2020-25 period, with adjustments included at PR24.
Full breakdown of payments and rewards and penalties: