Water customers may be owed £163m for sewage spills

Water customers in England and Wales could be owed £163million for sewage spills, company wrongdoers claim.

Water companies require their customers to treat wastewater, but instead dump it largely into rivers and onto beaches, Fideres researchers said.

Firms underinvested, resulting in “excessively low quality of service,” the researchers said.

But a water industry panel said companies would launch a £56billion program to tackle spills.

Water companies have been under pressure to clean up their acts after dumping wastewater into rivers and the sea 400,000 times in 2020.

The water industry in England and Wales is currently under criminal investigation by regulators Ofwat and the Environment Agency over discharges of water and has six enforcement cases against companies.

However, Fideres researchers called for further action over competition concerns, first reported by the Guardian.

Customers cannot choose their water supplier – which one they get depends only on where they live.

Water companies have an effective monopoly but are limited in how much they can charge customers from Ofwat.

But the researchers said water companies still “abused” their position by not investing enough, with investment in sewage and sewage networks declining over time.

Chris Pike, one of the researchers, said the companies “are not facing competitive pressures” which has led to underinvestment.

He pointed to recent research by the Financial Times, which found that water companies had “slashed” their investments in critical infrastructure by up to a fifth since they were privatized 30 years ago.

Over the same period, companies have borrowed £53bn, but much of that has been used to pay £72bn in dividends to shareholders, not new investment.

A certain amount of people’s water bill should be spent on sewage treatment.

But because of the spills, “there is reasonable reason under competition law that users have been overcharged by about £163million over the last six years,” the researchers said.

They called for the water companies to be investigated by either the Competition and Markets Authority (CMA) or Ofwat.

But industry body Water UK said the research would be a “distraction” from the “vital work” of “transforming it into our rivers that we all want to see” over the next decade.

“Water and sewage companies are rolling out the largest infrastructure program the industry has ever seen to improve spills and tackle spills, at a cost of £56billion,” said a spokesman.

The CMA and Ofwat declined to comment.

But the BBC understands Ofwat’s position is that discharges of sewage, particularly those that close beaches, are unacceptable, which is why it is investigating 2,200 water treatment plants in England.

The regulator has also called for urgent action from water companies on storm spill discharges.

Ofwat also works with other regulators, including the Environment Agency, which is conducting a criminal investigation into how companies comply with environmental permits.

The regulator has also taken action against Southern Water, which was hit with a record £90million fine in 2021 for intentionally dumping billions of liters of raw sewage into the sea.