Severn Trent permitted to charge customers an extra £88m after meeting watchdog targets

Severn Trent has been rewarded for its efforts to meet Ofwat targets – and will be permitted to add a potential £88m to customers bills for 2024/25 – although the company can choose not to.

The targets include a number of measures such as leakage performance, water supply interruptions, mains repairs, pollution incidents, and customer satisfaction.

Reacting to the news a Severn Trent spokesman said there would be no direct increase to next year's bills.

He said: "Today’s announcement from Ofwat will not lead to a direct increase on bills next year, instead our bills will be in line with inflation.

"Although Severn Trent has been recognised as a high performer and was the only company to be in Ofwat's leading category two years in a row previously, our bills have continued to be one of the lowest in the UK. At present it’s the second lowest in England and Wales, and we remain absolutely committed to keeping our bills low and affordable for everyone – that’s currently on average at around £1.15 a day."

It comes as a host of the country's other water companies were told to pay money back to bill payers – a total of £114m between them – because of their poor performance on targets.

The findings were published in Ofwat overall Water Company Performance report for 2022/23.

Severn Trent was downgraded from the 'leading' category to the 'average' category by the watchdog, with no firms achieving the top rating.

Seven other firms were in the bottom category, rated as 'lagging behind'.

The report showed Severn Trent was a top performer on its dealing with pollution incidents, and also beat its targets on leakages.

It did conclude the firm was poorer than the benchmark for drinking water quality compliance, listing the reason as being partly due to "higher incidents of bacteriological failures at water treatment works compared to 2021".

The company was again found to be a top performer on treatment works compliance, but was the only firm with a recorded increase in internal sewer flooding incidents.

Responding to the report a Severn Trent spokesperson said: “We continue to make great progress on the measures that matter most to our customers, such as driving down leakage, our best ever performance on low pressure, our industry-leading action plan to improve rivers as well as being recognised as sector leading for reducing pollutions.

"Last year, and for the fourth consecutive year, we once again received the highest 4* status for our environmental performance from the Environment Agency.

"Although, despite being one of the few companies rewarded for outperforming against measures, we will work even harder to meet our customer’s expectations, and we are confident that though our multimillion pounds investment we’ll deliver even more for our communities and the environment this year.”