‘Cut the harm to rivers in England,’ Ofwat tells water firms

Ofwat has this morning told water companies to set out plans detailing how they will “cut the harm they cause to rivers in England”.

The published plans should cover the period up to March 2025 and “support, and relate to, any company response to forthcoming targets from government regarding improvements to river quality”, it said in a statement. 

“Improving the sector's impact on rivers and reducing harm from storm overflows will require companies to understand and address the root causes of the issue,” it added.

The demand comes as the water sector is under investigation by Ofwat and the Environment Agency over the management of wastewater treatment works and the widespread and frequent discharges of untreated sewage into rivers, outside the conditions of water firms’ permits. Ofwat says it will issue an update in the coming weeks on the progress of the investigation and any further action it intends to take.

Ofwat’s demand for the new plans is in line with a new duty under the Environment Act 2021 for water companies to reduce environmental and public health harm from the use of storm overflows.

David Black, Ofwat's acting chief executive, said he expects water companies to “own responsibility for the impact they have on the environment. That means better measuring and monitoring to understand the impact as well as reducing the harm they cause.

"Customers and the wider public want to know how their water company is stepping up to address environmental concerns. Actions can and must start now. I want companies to spell out their actions and intended impacts and timeframes for reducing harm to our rivers." 

Last month, Black wrote to water company remuneration committee chairs stating that performance-related pay should reflect performance for customers and the environment.

 He wrote: “You will be aware of the current high level of scrutiny and concern around water company performance amongst stakeholders and reflected widely in the media. Companies' performance in some areas, most notably on the environment, risks eroding trust and confidence in the sector.” 

Consequently, when pay for 2021/22 is decided it should take into account “performance for customers, including performance on the environment” and any decisions made should be “backed up by robust and clear explanations that are accessible to the public”, Ofwat said in a statement.

It added: “As a monopoly provider of an essential public service, customers and society expect companies to uphold the highest standards of corporate governance. We were clear as part of the 2019 price review that performance related executive pay should demonstrate a substantial link to stretching performance delivery for customers which includes environmental commitments and obligations.  

“Given the current concern about environmental performance we urge remuneration committees to give particular consideration to the clarity of reasoning for any awards made in this area.”



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