Ofwat to return £240 million to UK water customers by 2030 over poor performance

The regulator plans penalties on under‑performing water firms, offset by a planned £3.4 billion tariff rise.

By Felo News Desk · Published Wed, 14 Oct 2026 09:26:26 GMT

UK water regulator Ofwat announced that households could see £240 million removed from water bills by 2030 after firms fail to meet environmental and customer‑service targets, according to three UK outlets.

What happened

Ofwat’s draft plan for the 2025‑26 financial year proposes penalties on a range of water companies that do not meet set targets. The net reduction in customer bills is projected at £240 million by the 2029‑30 period, with £107 million of that amount slated for the 2027‑28 billing year.

What the reports add

Yorkshire Water and Thames Water are set to face the largest under‑performance deductions, £75 million and £46 million respectively, in April 2027.
Severn Trent and Northumbrian Water are expected to receive the biggest out‑performance payments.
Ofwat will make its final decision on the outcome delivery incentive payments by 15 December, with the changes taking effect on bills from 1 April the following year.
The regulator also highlighted that the bill cuts could be offset by a plan allowing water companies to raise annual tariffs by an additional £3.4 billion on top of the 36 % average rise agreed for the five‑year period to 2030.
Prime Minister Andy Burnham unveiled new legislation late last month aimed at paving the way for public ownership of failing water firms, promising a “very different water system” over the next decade.
Environment Secretary Dame Angela Eagle will present a strengthened Water Bill to MPs.

What was said

“affected by a range of factors and the effect will vary by company and customer type”.

Ofwat stressed that the changes to bills will be returned to households and businesses through their water bills.

How it came about

Earlier this year Ofwat approved a 36 % average rise in water tariffs over the five‑year period to 2030. In a separate move, the regulator announced plans that would allow water companies to increase annual tariffs by an additional £3.4 billion, potentially offsetting the bill cuts for many customers. The regulator’s latest draft follows previous enforcement actions and ties into broader sector challenges, such as the Thames Water pipe burst in September that left thousands without supply (see Felo coverage).

Key facts

Ofwat plans to return £240 million to water customers by 2030. (independent.co.uk)
£107 million of the reduction will be applied in the 2027‑28 billing year. (standard.co.uk)
Yorkshire Water and Thames Water face the biggest penalties of £75 million and £46 million respectively in April 2027. (standard.co.uk)
Ofwat also intends to allow an extra £3.4 billion in tariff increases on top of a 36 % average rise to 2030. (independent.co.uk)