Key facts
- Water companies face proposed penalties of £240 million for missing performance targets.
- Approximately £107 million is expected to be returned to customers through lower bills in 2027-28.
- Yorkshire Water and Thames Water face the largest penalties.
- Some companies will receive reward payments for meeting targets.
Water companies in England and Wales are facing proposed penalties totaling £240 million for failing to meet performance targets in 2025-26, according to regulator Ofwat. Around £107 million of this adjustment is expected to translate into lower customer bills in 2027-28. Yorkshire Water and Thames Water are among those facing the largest deductions, with potential bill reductions of £27 and £7 respectively. Conversely, Severn Trent and Northumbrian Water are in line to receive reward payments for meeting their targets. Ofwat will finalize its decision by December 15, with the changes taking effect from April 1, 2027. The water industry has faced criticism over rising bills, sewage pollution, high debt, and underinvestment.