News

Water Customers ‘Overcharged £1.5bn’ Due To Pollution Underreporting

In a UK-first, an environmental competition class action has been launched against water firms in England by water resources specialist professor Carolyn Roberts, who believes that six suppliers have overcharged customers between £800 million and £1.5 billion by significant underreporting of sewage pollution.

The companies in question are Thames Water, Anglian Water, Yorkshire Water, United Utilities, Northumbrian Water and Severn Trent, the Guardian reports, with a tribunal hearing that they were able to charge higher bills than would have been permitted had regulators been provided with a clearer picture of their pollution rates.

Lawyers for Ms Roberts argued that the companies had taken advantage of their monopoly position in the market to mislead industry regulators over how much sewage was being discharged into the nation’s waterways from their assets over the last decade.

Water firms are legally required to report pollution incidents to both the Environment Agency and Ofwat, but Julian Gregory told the tribunal that companies do not face any competitive pressure when it comes to providing sewerage services to the general public.

Instead, the Ofwat-controlled pricing regime is structured in such a way that firms have a financial incentive to reduce pollution rates, with the watchdog able to limit how much customers are charged for drinking water and sewerage provision.

Mr Gregory explained that these six companies had been misleading regulators by underreporting discharge incidents from treatment works and combined sewer overflows since 2014, which means that Ofwat had allowed them to charge higher prices than if this pollution had been reported accurately.

He made mention of Thamest Water data analysis, which indicated that the company may have failed to send in reports of over 6,000 raw sewage discharges.

The legal representative said: “Many people care deeply about the state of our rivers … sewage spills to them can be incredibly damaging. As the true number of sewage spills have become apparent there has been a public outcry.

“If the [water companies] have been underreporting spills, they will not have been properly incentivised to reduce sewage spills.”

Ms Roberts is now applying for collective proceedings orders against these six companies. If granted, a full trial can take place to establish whether household customers have been overcharged, which would see automatic refunds of millions of pounds.

Commenting on the development, a spokesperson from industry body Water UK said: “This highly speculative claim is entirely without merit. The regulator has confirmed that over 99 per cent of sewage works comply with their legal requirements. If companies fail to deliver on their commitments, then bills will automatically be reduced.”

A growing pollution problem

It remains to be seen if Ms Roberts’ assertions hold any water and we’ll be keeping a close eye on this story as it develops (so stand by for further updates as they happen), but what is certainly safe to say is that there is a burgeoning pollution problem for much of the UK, in large part driven by supplier water mismanagement.

Stats from the Environment Agency, published earlier this year, revealed that there were 3.6 million hours of spills in 2023, up from the 1.75 million hours recorded in 2022, which averaged out to 1,271 spills every day around the country.

Water suppliers are legally permitted to make sewage discharges under specific circumstances, such as periods of heavy rainfall, which can put significant pressure on the network and increase the risk of sewage backing up into homes and businesses.

But permit breaches have been climbing over the last couple of years, with the combined sewer overflow system being used even when rainfall hasn’t been evident, incidents known as dry spills.

The government’s new water (special measures) bill aims to crack down on sewage dumping, strengthening regulations and bringing in tougher measures for water companies. Regulators will be granted stronger enforcement powers to implement tougher action more quickly if companies are found to cause damage to the environment.

Tougher penalties will also be introduced, including possible imprisonment, if water bosses obstruct or fail to cooperate with investigations, while bonuses will be banned if the necessary standards to protect the environment aren’t upheld.

Ofwat also recently proposed a spending package of £88 billion to ensure that water companies can carry out necessary infrastructure upgrades to help reduce pollution.