Research and analysis

Water and sewerage companies in England: environmental performance report 2022

Published 12 July 2023

Applies to England

A summary of the environmental performance of the 9 water and sewerage companies operating in England.

1. Chair’s foreword

The performance of many of the 9 English water and sewerage companies for 2022 is very disappointing: minimal improvement in star ratings compared to 2021. The sector only achieved 23 stars out of a maximum of 36 – albeit we did tighten the Environmental Performance Assessment (EPA) again this year to drive improvements in standards across the sector.

The number of pollution incidents (from sewerage and water supply assets) worsened from 1,883 in 2021 to 2,026 last year. It is simply unacceptable to see a decline in this vital metric. 2022 was another missed opportunity for the companies to demonstrate they can improve their performance. Even worse, the early unconfirmed data for 2023 suggests that there has been no improvement this year either. I do hope this changes soon.

The disappointing results are surprising given that when I talk to the Chairs and CEOs of these companies, I get a real sense of their intent to do better. But why is this not happening yet? Primarily, I think, because of the time it takes for cultures to change in large organisations and because there are some deep-rooted problems which can only be solved by significant investment. Not just this year and next, but for some decades to come.

I am not universally gloomy though. Some companies are doing better and some metrics are improving. Credit to Severn Trent Water who retain a 4 star rating for the fourth year, and to United Utilities and Northumbrian Water who are not far behind. But all know they are at the top of a very poor league. We do see improvements this year in serious pollution incidents, down from 62 to 44, but nevertheless, performance is not where it should be.

Storm overflow discharges are under significant scrutiny, and rightly so. The data in this report briefly touches upon storm overflows, where we have seen some signs of improvement in 2022. But this should be expected. It was a notably dry year and storm overflows should be operated less in these conditions.

By the end of 2023, water companies will be required to monitor 100% of storm overflows, which will allow us to regulate using better evidence, and enable us to determine whether 2022’s improvements were the start of a trend. As we start our EPA review for the next period (2026 to 2030 data years) we will look to include this new information. In the interim, we will publish a spotlight report in autumn which will include more detail on the issue.

We know performance in recent years has seen trust in the water industry deteriorate. If it is to be rebuilt, we need to see profound, long-term change across the sector.

For all organisations which have a role to play in improving the water environment, this means stepping forward and taking collective responsibility. Water companies, regulators, government, NGOs and many others in general all want the same thing: better environmental outcomes, including cleaner rivers and seas.

Individually we have a clear responsibility to keep each other honest, not to allow for misinformation or to lose sight of scientific consensus. But more importantly, all organisations need to demonstrate that we can carry out our duties responsibly, and that we can work together.

First, we must treat the recent public apology from Water UK and the English water and sewerage companies as a signal of change. It is welcome and aligns with the sentiment shown through our annual performance meetings where all companies demonstrated a distinct shift in culture – towards improvement and better environmental outcomes.

Second, we must all play our respective roles to make sure we maximise the opportunities within the next 5-year price review. Together we can secure the greatest ever investment in our water environment. This will not fix all of the problems immediately, but it will enable significant long-term change and better environmental outcomes.

Third, the Environment Agency will play its part by transforming the way we regulate the sector. Over the next 2 years we will introduce additional specialist officers to focus solely on water company regulation while also introducing new tools which will turn huge quantities of monitoring information into regulatory intelligence.

This will give us the capacity to increase time spent regulating the water industry and enable our officers to focus on the highest risk sites and issues more easily. We welcome the announcement on unlimited variable monetary penalties which will also improve our enforcement powers and lead to better environmental outcomes.

The public, the environment and our waters demand change. If we can move forward together, not only will we demonstrate our individual delivery and contribution towards the government’s Plan for Water, we will also demonstrate our part in sharing collective responsibility in achieving better environmental outcomes. For people, the environment and our wildlife.

Alan Lovell, Chair of the Environment Agency

2. Performance messages for 2022

This report is about the 9 water and sewerage companies (called water companies within this report) that provide clean drinking water (water supply) and wastewater (sewerage) services. There are also water only companies providing only water supply, and companies providing localised water supply and sewerage services. Neither of these are covered in this report. This report includes our Environmental Performance Assessment for several core requirements as well as broader assessments of other aspects of environmental performance in 2022.

For 2022, the main performance messages for the sector are:

• 5 water companies are rated as requiring improvement (2 stars) in our EPA – 3 water companies are rated as good (3 stars) and one water company achieved 4 stars
• minimal improvement in EPA star ratings compared to 2021 – the majority of companies are not meeting basic environmental requirements and need to improve to achieve and sustain expected levels of regulatory and environmental performance
• the number of serious pollution incidents (category 1 and 2) reduced to 44 but remained unacceptably high and numbers have been erratic in recent years – we expect to see a more sustained reduction in numbers trending towards zero
• for the serious pollution incident EPA metric, 4 companies performed significantly below target (red) – more than half of serious incidents were from the assets of 2 water companies (Anglian Water and Thames Water)
• total pollution incidents from sewerage and water supply assets (category 1 to 3) increased to 2,026, the highest number recorded since 2019 – the vast majority were from sewerage assets but there was also a rise in incidents from water supply assets
• the number of total pollution incidents from sewerage assets, our EPA metric, was similar to 2021 and remains too high – Southern Water and South West Water continued to perform significantly below target (red)
• self-reporting of all pollution incidents by water companies was 82%, the best since the start of the EPA in 2011 – however this contrasts with only 48% of serious incidents being self-reported
• 99.0% of sewage treatment works (STW) and water treatment works (WTW) were compliant with numeric permit conditions for discharging treated wastewater – this is an improvement but compared to recent years compliance across the sector is not consistent
• for the satisfactory sludge use and disposal EPA metric, all water companies performed better than target (green)
• 99.5% of planned environmental improvement schemes were completed from the Water Industry National Environment Programme (WINEP) – 3 water companies failed to meet all requirements within planned deadlines (Thames Water rated red, Anglian Water and South West Water rated amber for this EPA metric)
• one water company (South West Water) performed significantly below target (red) for the Supply Demand Balance Index (SDBI) EPA metric

3. Environmental Performance Assessment (EPA)

3.1 EPA for 2022

We introduced the EPA in 2011 as a tool for comparing performance between water companies and across years for several core requirements. Please refer to our EPA metric guide for more information on our regulation and how we set targets for water companies. It includes our definition of red, amber and green status and thresholds for each metric, and our star ratings for performance across all metrics. For 2022 the 7 EPA metrics are:

• total pollution incidents (sewerage assets only)
• serious pollution incidents (sewerage and water supply assets)
• self-reporting of pollution incidents (sewerage and water supply assets)
• discharge permit compliance (STW and WTW numeric water quality limits for treated wastewater only)
• delivery of the WINEP
• satisfactory sludge use and disposal
• SDBI

Every 5 years we review the EPA to align with the 5 year Asset Management Plan (AMP) investment cycles for water companies. For 2021 to 2025 we have revised metric definitions and deliberately tightened metric thresholds. We consulted with the water companies and stakeholders and released a revised EPA methodology (in October 2020). This describes our updated reporting approach and EPA for use for 2021 to 2025 data reporting. For 2022 the changes we have implemented are:

• the discharge permit compliance metric is now a core metric (meaning no company can have a rating of 4 stars unless they achieved target (green) for this metric
• total pollution incident metric thresholds have been tightened as part of the 5 year glidepath
• reinstatement of the satisfactory sludge use and disposal metric – the EPA is now based on 7 metrics

Please see the EPA results for 2022. Five water companies are rated as requiring improvement, 2 stars (Anglian Water, Southern Water, South West Water, Thames Water and Wessex Water). Three water companies are rated good, 3 stars (Northumbrian Water, United Utilities and Yorkshire Water). One water company achieved our industry leading rating of 4 stars (Severn Trent Water). Northumbrian Water and United Utilities did not achieve a rating of 4 stars due to their amber performance status for the core metric (discharge permit compliance).

Ofwat (the economic regulator of water companies) is using 2 of our EPA metrics as common performance commitments for 2020 to 2025. Total pollution incidents and discharge permit compliance performance may have financial consequences for water companies.

3.2 EPA for 2021 to 2025

The aim of the EPA is to push improvements in water company performance and highlight a lack of progress by some. We want to make sure that there is continuous improvement in standards across the sector and that statutory obligations and expectations are met.

Over this 5 year EPA period (2021 to 2025) we are ranking water companies based on cumulative star ratings. This highlights water company progress towards achieving industry leading performance (4 stars) and identifies water companies that have been able to sustain this. The results so far (Table 1) show that sustained leading performance is possible across the EPA metrics (Severn Trent Water). However, there is a significant amount of improvement required by poorer performing water companies to close the gap and improve the sector as a whole. The 2022 EPA results show minimal sector improvement in star ratings compared to 2021 – a total of 23 stars out of a maximum of 36.

Table 1. Ranked cumulative EPA performance star ratings (out of 8) for the 9 water and sewerage companies 2021 to 2025

Water company	2021 (year 1)	2022 (year 2)	2023 (year 3)	2024 (year 4)	2025 (year 5)	Total (out of 8 stars)
Severn Trent Water	4 stars	4 stars	no data	no data	no data	8 stars
Northumbrian Water	4 stars	3 stars	no data	no data	no data	7 stars
United Utilities	4 stars	3 stars	no data	no data	no data	7 stars
Yorkshire Water	2 stars	3 stars	no data	no data	no data	5 stars
Anglian Water	2 stars	2 stars	no data	no data	no data	4 stars
Thames Water	2 stars	2 stars	no data	no data	no data	4 stars
Wessex Water	2 stars	2 stars	no data	no data	no data	4 stars
Southern Water	1 star	2 stars	no data	no data	no data	3 stars
South West Water	1 star	2 stars	no data	no data	no data	3 stars

For historic results please see our Environmental Performance Assessment results 2011 to 2022. Company specific reports with data for 2011 to 2022 are also available.

3.3 Performance expectations (2020 to 2025)

In October 2017 we set out our performance expectations for 2020 to 2025 (Water Industry Strategic Environmental Requirements, WISER) describing environmental, resilience and flood risk obligations. Water companies were required to take these into account when developing their business plans for the AMP7 period 2020 to 2025.

We have the following expectations of water companies that are directly relevant to the EPA:

• trend to minimise all pollution incidents (category 1 to 3) by 2025 – there should be at least a 40% reduction compared to numbers of incidents recorded in 2016
• serious pollution incidents must trend towards zero
• a plan in place to achieve 100% compliance for all licences and permits and 100% compliance with all look-up table conditions (where a limit cannot be exceeded more than a specified number of times in a 12 month period)
• high levels of self-reporting of pollution incidents with at least 80% of incidents self-reported by 2025 and more than 90% of incidents self-reported for just STWs and pumping stations (PS) combined
• business plans include all measures identified within the WINEP and these are planned well and completed to agreed timescales and specification
• assess resilience of their water supply system to predicted droughts and other non-drought water supply hazards
• manage sewage sludge treatment and re-use so as not to cause pollution to land, surface water or groundwater

The majority of water companies translated our expectations into performance commitments for their 2020 to 2025 business plans. These performance commitments are regulated by Ofwat and may have financial consequences for water companies.

4. Pollution incident performance

Pollution incidents lead to the release of harmful substances into air, land or water, and some can cause significant harm to the environment. We categorise all incidents based on their impact. Incidents are assessed as having a major (category 1), significant (category 2), or minor (category 3) impact on the water environment. Please refer to our EPA metric guide for more information. We are not seeing sustained progress towards our performance expectations and we remain concerned about the number of incidents. You can find details of how we are taking action with the water companies in section 12 of this report (regulatory interventions).

Storm overflows are a necessary part of the current sewerage system. They are designed to discharge storm sewage (wastewater diluted with rainwater) to rivers or the sea at times of rainfall or snow melt. This is to prevent storm sewage backing up into homes and flooding streets. So, if they are operating in these circumstances and are compliant with their permit they will not be reported and recorded as pollution incidents. Monitoring of storm overflows is increasing to capture information on how they are operating. This is covered in section 7.2 of this report (Event Duration Monitoring, EDM, of storm overflows).

4.1 Serious pollution incidents

The number of serious water quality pollution incidents (category 1 and 2) from sewerage and water supply assets was reduced compared to the previous year. However the number remains unacceptably high (Figure 1). In recent years serious incident numbers for the sector have been erratic contrary to our expectation to trend towards zero. This expectation was first set out to water companies in 2013 (for the AMP6 period 2015 to 2020). It was repeated in WISER (issued in 2017) for the period 2020 to 2025. In 2022:

• there were 44 serious incidents – a reduction compared to 62 in 2021, 52 in 2019 and 56 in 2018, and the same as 44 in 2020
• more than half of serious incidents were from the assets of 2 water companies (Anglian Water – 11 and Thames Water – 17) – Thames Water had their worst performance since 2013
• 4 water companies performed significantly below target (red) for this EPA metric (Anglian Water, Southern Water, Thames Water and Wessex Water)
• only 3 water companies achieved performance better than target (green) for this EPA metric (Northumbrian Water, Severn Trent Water and United Utilities)
• Northumbrian Water and United Utilities had no serious incidents (United Utilities for the third time in 4 years) – which shows that the performance expectation can be met
• most of the serious incidents were from below ground sewerage assets (rising mains – 11 and foul sewer – 18)
• there were 2 serious incidents from water supply assets, both from the water distribution system of Anglian Water – sector numbers have been decreasing since the high of 14 in 2017

Figure 1. Number of serious pollution incidents (category 1 and 2) from sewerage and water supply assets, and trend for the 9 water and sewerage companies 2011 to 2022

For the most serious (category 1) incidents, in 2022:

• there were 6 compared to 8 in 2021, 3 in 2020, 11 in 2019, 9 in 2018 and 11 in 2017
• Southern Water had 2 category 1 incidents, Thames Water had 3, and Wessex Water had 1

4.2 Total pollution incidents

The total number of water quality pollution incidents from sewerage and water supply assets increased for the first time since 2019 (Figure 2). This is disappointing and does not demonstrate progress towards our WISER performance expectation for the period 2020 to 2025. Water companies must show a trend to minimise pollution incidents with at least a 40% reduction compared to the number of incidents (1,902) in 2016. In 2022:

• there were 2,026 incidents from sewerage and water supply assets, an increase from 1,883 in 2021 and 1,919 in 2020
• there were 368 incidents from water supply assets (compared to 206 in 2021) mostly from the water distribution system (345 in 2022 compared to 189 in 2021)
• the vast majority of incidents were from sewerage assets

Figure 2. Number of pollution incidents (category 1 to 3) from sewerage and water supply assets, and trend for the 9 water and sewerage companies 2011 to 2022

Our EPA metric assesses the total number of water quality pollution incidents from water company sewerage assets. In 2022:

• there were 1,658 sewerage pollution incidents, compared to 1,677 in 2021, 1,715 in 2020, 1,952 in 2019, 1,623 in 2018 and 1,627 in 2017 – whilst most water companies reduced sewerage incidents compared to the year before, sector numbers remain too high
• 2 water companies performed significantly below target (red) for this EPA metric – Southern Water for the fourth year in a row and South West Water for the twelfth year in a row
• 4 water companies performed better than target (green) for this EPA metric (Northumbrian Water, Severn Trent Water, United Utilities and Yorkshire Water)
• if all water companies had achieved green EPA status in this metric there would have been at least 540 fewer sewerage pollution incidents and less environmental harm

4.3 Self-reporting of incidents

We expect water companies to report pollution incidents to us before others do. Without a rapid response, the impact of pollution can escalate and the opportunity for mitigation measures can be lost. For 2022 it is encouraging to see the best levels of self-reporting by the water companies since the start of the EPA in 2011. Our WISER performance expectation of high levels of water company self-reporting by 2025 has been met in 2022. We expect this to be maintained in future years. However, water company self-reporting of serious incidents was far lower than expected. This is a significant concern given the impact serious incidents have on the environment and we are following this up with the water companies.

In 2022:

• only 48% (21 out of 44) of serious incidents (category 1 and category 2) were self-reported by the water companies
• for the EPA metric, 82% of all recorded incidents were self-reported by water companies – an improvement compared to 77% in both 2021 and 2020, 80% in 2019 and 76% in the previous 2 years
• for the EPA metric, 92% of all recorded incidents from just PS and STW combined were self-reported – an improvement compared to 88% in 2021 and meeting the additional EPA target of 90% for these assets
• 5 water companies performed better than target (green) for the EPA metric (Northumbrian Water, Severn Trent Water, Southern Water, United Utilities and Wessex Water)
• 4 water companies performed below target (amber) for the EPA metric (Anglian Water, South West Water, Thames Water and Yorkshire)

5. Compliance with licences and permits

All water companies have licences and permits and are required to comply with them at all times. We set conditions to control the impact that licensed and permitted activities are allowed to have, based on the nature and sensitivity of the receiving environment. Water companies must comply with these to reduce their impact and protect the water environment. You can find details of how we are taking action with the water companies in section 12 of this report (regulatory interventions).

The EPA includes assessment of compliance with numeric permit conditions to discharge treated wastewater from STW and WTW (not storm overflows). We plan to expand the EPA in the future to cover more aspects of water company permit compliance.

The increased monitoring of storm overflows is covered in section 7.2 of this report (EDM of storm overflows). This will allow us to further assess and report on compliance of the wider sewerage network in the future.

5.1 Discharge permit compliance (numeric)

This section is about water company compliance with permits to discharge treated wastewater from STW and WTW (not storm overflows). As part of the EPA we assess compliance with conditions in these permits that set numeric limits for pollutants in the discharges. Sector compliance improved from 2021, but when compared to recent years, compliance for the sector is not consistent (Figure 3). Water companies need to demonstrate that their plans will meet our WISER performance expectation and statutory obligations for 2020 to 2025 of 100% compliance. In 2022:

• 99.0% of STW and WTW were compliant, compared to 98.7% in 2021, 99.2% in 2020, 98.7% in 2019 and 98.6% in the previous 3 years
• out of 3,802 STW and WTW permitted discharge outlets there were 38 non-compliant sites compared to 49 in 2021, 31 in 2020 and 49 in 2019
• 5 water companies achieved target (green) for this EPA metric (Severn Trent Water, Thames Water, South West Water, Wessex Water, Yorkshire Water)
• 4 water companies performed below target (amber) for this EPA metric (Anglian Water, Northumbrian Water, Southern Water and United Utilities) – if these water companies had achieved green EPA status there would have been at least 10 fewer non-compliant sites

Figure 3. Number of STW (and from 2016 including WTW) failing discharge permit numeric limits and trend for the 9 water and sewerage companies 2011 to 2022

As with wastewater from STW, adequate treatment of discharges from WTW is essential to make sure water companies do not pollute the receiving environment. For 2022, WTW compliance improved to the highest level in recent years. We have seen an improving trend since WTW compliance was included in the EPA from 2016. However further improvement is required as WTW compliance remains lower than STW compliance. In 2022:

• 97.4% of WTW permitted discharge outlets were compliant (compared to 99.1% for STW) – an improvement on 96.8% in 2021
• out of 271 WTW permitted discharge outlets, 7 WTW were non-compliant – this compares to 9 in 2021, 8 in 2020, 12 in 2019 and 2018, 13 in 2017, 20 in 2016 and 21 in 2015

5.2 Abstraction and impoundment licence compliance

Water companies hold abstraction and impoundment licences that allow them to abstract water from the environment or impound water. For 2022, out of 1,218 licences, we have so far assessed 14 as non-compliant (98.9% compliance).

Further compliance assessment for 2022 performance is continuing on recent returns of abstracted quantities from the water companies for the period to 31 March 2023. We are developing a new system for collating annual data, so that abstraction and impoundment licence compliance can become an EPA metric.

5.3 Waste permit compliance

Water companies operate a variety of waste facilities ranging from biowaste treatment, landfill, biogas combustion, sludge incineration and transfer stations. For permitted activities we assess compliance and give a compliance band of between A (good) to F (poor). Sites in compliance bands C and D must improve. Those in E and F must significantly improve and are more likely to have their permit revoked unless they are working towards achieving compliance in a timely manner. In 2022:

• 4 permitted operations were assessed as band D (1 for Anglian Water, 2 for Severn Trent Water and 1 for Southern Water) – this was a decline in performance from 2021, when there was 1 band D and 1 band E performance

• there were no serious incidents (category 1 or 2), but there were 18 incidents that caused minor impacts to air (category 3) – these were from 12 permitted waste facilities operated by 6 of the 9 water companies

• half of the 18 incidents were related to just 3 permitted waste operations (3 from an Anglian Water site, 4 from a Thames Water site and 2 from a United Utilities site)

5.4 Reservoir compliance

Water companies operate 609 large raised reservoirs, with legal requirements for them to be supervised and regularly inspected by qualified civil engineers. In 2022, 8 were recorded as non-compliant (4 Northumbrian Water, 1 South West Water, 1 United Utilities and 2 Yorkshire Water). Five of these returned to compliance by the end of 2022. Three of these remained non-compliant into 2023 (Northumbrian Water 2 and Yorkshire Water 1).

Water companies are responsible for the safety of their reservoirs. Government issued a direction in April 2021. This stated that all operators and owners of large raised reservoirs must prepare on-site emergency flood plans for their reservoirs. This includes water companies. A qualified civil engineer must have certified these plans. By 31 December 2022, compliance with this new requirement was 100% for the water companies.

We are working with Defra to deliver the recommendations made in the independent reservoir safety review report. Ministers have accepted the recommendations and we have started a reservoir safety reform programme to implement them. We are working with water companies and other stakeholders in the reservoir sector and encourage ideas and feedback throughout the reform process.

Maintaining reservoir safety continues to be our priority. We will continue to work with water companies to make sure high standards of reservoir safety are kept at all times.

6. Satisfactory sludge use and disposal

Sewage sludge is a product of wastewater treatment. Water companies must manage sewage sludge treatment and re-use so as not to cause pollution to soil, surface water or groundwater. For the calendar years 2018 to 2021 we suspended the sludge metric from the EPA whilst we reviewed the regulatory regime for sludge treatment, storage and use. The EPA sludge metric has now been reinstated, with updated and clarified definitions. It measures the percentage of sewage sludge produced that is dispatched and used or disposed of in a satisfactory manner. We review water company data to check compliance with relevant environmental laws. These include the Sludge (Use in Agriculture) Regulations (SUiAR) and the Environmental Permitting (England and Wales) Regulations (EPR). For 2022:

• the 9 water companies dispatched 816,023 tonnes (dry solids) of sewage sludge – 94.5% of this was used in agriculture (across 156,529 hectares of land)
• all water companies performed better than target (green) for this EPA metric
• 5 water companies (Northumbrian Water, Severn Trent Water, Southern Water, Thames Water and Wessex Water) reported 100% satisfactory sludge use and disposal
• 4 water companies reported below 100% – Anglian Water (99.96%), South West Water (99.14%), United Utilities (98.93%) and Yorkshire Water (99.91%)

We have re-published our regulatory position statement with conditions enabling the supply, storage and spreading of sewage sludge containing other materials (on GOV.UK in February 2022). To address pressures on the sludge supply chain to agriculture we published our regulatory position statement for storing treated sewage sludge. This was withdrawn after it expired in August 2022. Work continues on our strategy for safe and sustainable sludge use (published on GOV.UK in March 2020) to move sludge regulation from the SUiAR to the EPR. We continue to assess water company sludge disposal and use. We are promoting innovation through the price review (PR24) investment process, for 2025 to 2030, to achieve good environmental outcomes.

7. Progress with environmental improvement schemes

7.1 Water Industry National Environment Programme (WINEP)

In 2019 Ofwat set the prices that water companies could charge their customers between April 2020 and March 2025. As part of that price review (PR19) we developed and published a WINEP for each water company. Our expectation for all planned schemes (including asset improvements, investigations and monitoring) to be completed to agreed timescales and specification was not met by all companies. For the financial year ending March 2023:

• 99.5% of WINEP schemes (3,121 out of 3,136) had met requirements within planned deadlines
• 6 water companies met all requirements (green) within planned deadlines for 100% of their schemes
• Thames Water performed significantly below target (red) for this EPA metric due to 12 water quality schemes not meeting requirements within planned deadlines (95.2%)
• 2 water companies performed below target (amber) for this EPA metric due to water quality schemes not meeting requirements within planned deadline – Anglian Water (99.8%, 1 scheme), South West Water (99.6%, 2 schemes)

The EPA WINEP metric includes delivery of investigations and improvements. It does not include progress with installation of EDM of storm overflows (section 7.2).

7.2 Event Duration Monitoring (EDM) of storm overflows

Water companies must install EDM on their storm overflows to capture performance information (how often and for how long they are used). Water companies have an obligation to monitor all storm overflows by December 2023. We are monitoring and tracking their progress.

We have published the EDM storm overflow 2022 annual return dataset received from water companies operating in England (this includes Dŵr Cymru Welsh Water storm overflows in England). This is the third year that we have published the full data. In 2022:

• the annual return dataset included 14,454 storm overflows across the 9 water companies (Table 2 – not including Welsh Water)
• 13,197 storm overflows (91.3%) had EDM commissioned (meaning reliable data was expected)
• Anglian Water (68.2%) and Thames Water (61.8%) had the lowest percentage of EDM commissioned – Severn Trent Water (99.6%) and South West Water (99.3%) had the highest percentage of EDM commissioned

The 2021 and 2022 datasets also include water company reasons for performance issues with monitors and reasons for high spill counts.

Table 2. Summary facts from the storm overflow 2022 annual return dataset, ranked by percentage with EDM commissioned for the 9 water and sewerage companies

Water company	Number of storm overflows included	Number with EDM commissioned	Percentage with EDM commissioned
Severn Trent Water	2,466	2,457	99.6
South West Water	1,342	1,333	99.3
Northumbrian Water	1,564	1,542	98.6
Southern Water	978	963	98.5
Yorkshire Water	2,221	2,178	98.1
Wessex Water	1,300	1,182	90.8
United Utilities	2,254	2,004	88.9
Anglian Water	1,552	1,058	68.2
Thames Water	777	480	61.8

8. Security of water supply

The water companies are responsible for providing clean drinking water (water supply). Water resource management plans (WRMPs) set out how the water companies intend to achieve secure supplies of water for customers and a protected and enhanced environment. The EPA SDBI metric assesses how the actual supply demand balance has performed compared to what is in water company WRMPs. It measures the risk a company has experienced for the previous year in terms of supplying water to its customers. Water companies are expected to have a score of 100. For the period April 2022 to March 2023:

• 8 of the 9 water companies achieved target (green) for this EPA metric, reporting a score of 100
• one water company performed significantly below target (red) – South West Water with a score of 86

9. Delivery of water resources plans

Water companies must prepare WRMPs at least every 5 years to cover a minimum period of at least 25 years. They include targets for per capita consumption, metering and leakage. We have published the WRMP guideline. Water companies must review their 2019 WRMPs (for the period April 2020 to March 2025) and report to us on progress annually. We assess their annual reviews and report our findings to Defra. Defra are responsible for ensuring the statutory requirements around WRMPs are met.

This section presents findings from our last completed annual review of the main areas of water company information for the period April 2021 to March 2022. We receive water company submissions for annual reviews in late June each year. Therefore, we have not yet completed the annual review for April 2022 to March 2023 and are unable to present our findings for this period.

9.1 Average household consumption (per capita consumption, PCC)

Targets for reducing water consumption levels are included in the WRMP guideline. Water companies should aim to meet these targets in their plans. By reducing consumption, water resources will be more secure and the water environment more protected in the future.

April 2021 until March 2022 was relatively normal in terms of rainfall, however some months experienced extremes of very dry or very wet weather. Water company performance was still being impacted by COVID-19 which resulted in increased household water use and water company delays in delivering their metering programmes.

From April 2021 to March 2022 average household PCC was 140 litres per head per day, reduced from 148 litres per head per day compared to the year before. Most water companies experienced elevated levels of household consumption. This placed them in a poor position going into summer 2022 where widespread drought across England resulted in some water companies applying for drought permits. We expect all water companies to do more to manage household demand to within planned levels.

9.2 Leakage

Targets for reducing leakage are included in the WRMP guideline. By meeting targets and reducing leakage in their plans, water resources will be more secure and the water environment more protected in the future.

Ofwat has set a target for all water companies to meet a 16% reduction in leakage by the end of March 2025, compared to April 2017 to March 2018. We expect water companies to be proactive and explore innovative approaches to reduce their leakage. This should be in line with the 2018 National Infrastructure Commission’s report on England’s water infrastructure needs and Water UK’s (the water companies’ trade association) commitment to reduce leakage by 50% by 2050.

From April 2021 to March 2022 total leakage for the water companies was 2,289 megalitres per day, a decrease of 47 megalitres per day from the previous year. While most water companies reported a reduction in actual leakage, not all kept leakage within the levels they planned for the year. We expect these water companies to take action to address this deterioration in performance.

9.3 Metering

Expectations around increasing metering are included in WRMP guidance for water companies. Metering, particularly smart metering, is considered to have a key role in meeting leakage and water consumption targets. By meeting targets and increasing metering in their plans, water use will be more efficient. This will help to secure water resources and protect the water environment in the future.

All water companies have a planned metering programme. We expect any water company that is behind on their planned delivery programme to take immediate action.

From April 2021 to March 2022 household metering including unoccupied properties increased slightly compared to the year before to 56.89%. However it is still 2% behind the overall sector plan of 58.9%.

9.4 Drought 2022

In contrast to the annual review period April 2021 to March 2022, April 2022 to March 2023 experienced extensive periods of dry weather and drought. As a result, many water companies implemented their drought plans in 2022. This occurred after the annual review period included in this report.

10. Flood and coastal erosion risk management (FCERM)

Under the Flood and Water Management Act 2010, water companies are Risk Management Authorities (RMAs). This means they must act in a manner consistent with the National FCERM strategy for England and have a duty to cooperate with other RMAs. Between April 2022 and March 2023 water companies have:

• worked with partners to reduce flood risk to communities and enhance the environment
• enhanced the resilience of their networks and services to flooding
• produced and consulted on their draft drainage and wastewater management plans (DWMPs)
• continued to innovate and share good practice

Between April 2022 and March 2023, water companies invested:

• £117.7 million to reduce the risk of sewer flooding to properties
• £153.8 million to maintain the public sewer system to prevent blockages and flooding
• £9.6 million in property-level protection and mitigation measures to reduce the likelihood of customers’ homes experiencing sewer flooding

There have been some good examples of partnership working this year. These include:

• Anglian Water’s work with the Future Fens Integrated Adaptation Scheme
• Southern Water’s Combined Sewer Overflow pathfinder project
• Yorkshire Water’s Living with Water and Connected by Water partnerships

There are 12 regional flood and coastal committees (RFCCs). RFCCs play an important role in helping to protect communities from flooding and coastal erosion. They help us and partners to understand local issues better, and to balance local and national priorities. RFCC attendance is uniformly good across the sector, with water companies being represented at virtually all RFCCs. However, greater participation and engagement could lead to more effective delivery of flood risk management outcomes.

Data sharing between water companies and other risk management authorities is a means of improving delivery of flood risk management outcomes. A few water companies have made real progress with data sharing, but for others, effective sharing remains an issue. We are working with the water companies to identify and share best practice.

The sector generally responds well to multi-agency incidents. Many of the water companies are effective in responding, planning for, and learning from flooding. This is particularly evident where water companies have been engaged in multi-agency exercises.

Innovation looks strong across the sector. For example:

• we are working with the water industry and government to identify opportunities on the government estate for flood risk management projects – sustainable urban drainage and other climate related projects could provide wider benefits
• United Utilities’ Dynamic Network Management is a transformation programme to develop an intelligent wastewater network – it improves monitoring and applies artificial intelligence to identify causes of flooding, such as blockages, before customers are even aware of the problem

11. Drainage and wastewater management plans (DWMPs)

DWMPs set out how water companies intend to maintain, improve, and extend robust and resilient drainage and wastewater systems over the next 25 years. Their first 5 year plans justify their investment needs for the next price review in 2024 (PR24 covering 2025 to 2030).

All water companies consulted on their draft first cycle (non-statutory) DWMPs over the summer 2022. We worked with other regulators, Ofwat and the Consumer Council for Water, to review these and feedback to water companies. We set them clear expectations to improve their final DWMPs to make sure their planned investment delivers long-term environmental and societal outcomes. We also encouraged continued collaboration to make these plans as reliable an evidence base as possible for their PR24 business plans.

The water companies have now published their final DWMPs (available on their websites), including statements of response setting out how they addressed their consultation feedback. DWMPs have helped water companies better understand current and future pressures on the entire drainage and wastewater network, including from climate change, urban creep and population growth. They have enabled water companies to publicly share how they plan to meet Defra’s storm overflow discharge reduction plan. They have also identified partnership solutions, such as sustainable drainage systems and nature-based solutions, to deliver multiple benefits. Continued meaningful engagement and data sharing will be critical for the delivery of solutions to drainage and wastewater risks.

DWMPs will be updated every 5 years (at the latest), prior to the next price review (PR29). With the passing of Section 79 of the Environment Act 2021, the second cycle will be statutory.

12. Regulatory interventions

We are taking action against the water companies by challenging them to address areas where they are failing or not meeting our performance expectations. We describe these actions in the following sections.

12.1 Enforcement and sanctions

The Definitive Guideline on Sentencing of Environmental offences came into force on 1 July 2014. It improved guidance and reduced inconsistencies in sentencing, including the levels of fines handed down by the courts. Between 2015 and 2023 (to 4 July) there have been 59 prosecutions of water companies (some involving multiple cases) securing fines of over £150 million (Table 3). In 2022:

• we completed 9 prosecutions against 3 different water companies as a result of which total fines of £4,198,750 were imposed – all prosecutions were as a result of pollution incidents
• prosecution fines ranged from £18,000 to £1,600,750
• we accepted 3 enforcement undertaking offers totalling £500,000

Table 3. Enforcement and sanctions for the 9 water and sewerage companies 2015 to 2022 (including 2023 to 4 July)

Year	Number of prosecutions	Value of prosecution fines	Number of enforcement undertakings	Value of enforcement undertakings
2015	9	£2,494,500	0	£0
2016	10	£6,560,000	4	£610,000
2017	9	£21,589,334	15	£1,435,900
2018	3	£427,000	15	£3,432,150
2019	5	£3,097,000	11	£2,429,760
2020	3	£852,000	14	£2,465,901
2021	7	£102,490,000	9	£1,703,272
2022	9	£4,198,750	3	£500,000
2023 (to 4 July)	4	£8,644,000	1	£235,000

Table note: cases against a water company sentenced in court on the same day count as one prosecution. If a prosecution has an appeal hearing it is recorded here according to the date of the hearing not the original prosecution.

There are 4 outcomes that we seek to achieve through enforcement. These are to:

• stop illegal activity from occurring
• put right environmental harm or damage
• bring illegal activities under regulatory control
• punish and deter future offending

Prosecution continues to be an important response where it is in the public interest, as a proportionate and outcome focused enforcement option to protect the environment. Prosecution is rightly reserved for those pollution incidents and permit or licence breaches where there is serious, actual or potential environmental harm and a high level of culpability.

Fines continue to reflect the size of the organisation concerned as well as the offence category. Sentencing is a matter for the courts who fine on a case-by-case basis, and for this reason fines vary significantly. An enforcement undertaking is a voluntary agreement offered by those who have committed a less serious offence that becomes legally binding once accepted. It funds local environmental improvements but also requires that steps are taken to put right what went wrong and to prevent it happening again.

A variable monetary penalty (VMP) is a proportionate monetary penalty we may impose on a company that commits certain environmental offences. They are not currently available for Environmental Permitting Regulations (EPR) offences. No VMPs were imposed on water companies in 2022. We welcome the proposed changes in legislation to include EPR offences and to remove the £250,000 cap.

Before taking action we must investigate to gather evidence, consider the facts and establish matters relevant to public interest and sentencing. This takes time and our enforcement activity can conclude some months or years after the original offence occurred, particularly court cases. We are continuing with our major investigation of all the water companies into potential wastewater treatment works flow-to-full treatment (FFT) non-compliance.

12.2 Improving water company performance

Our role is to regulate the water companies to make sure they comply with the law and protect the environment. We have set clear expectations for them since 2013. It is their responsibility to meet the conditions we set in their licences and permits and meet their statutory obligations.

As the regulator we are:

• through our Water Industry Transformation Programme, significantly expanding and improving the way we regulate with additional dedicated officers - embedding an intelligence-led approach using centralised data to target our resource according to risk so we uncover non-compliance efficiently and put effective interventions in place
• conducting our largest ever criminal investigation of all water companies into potential STW flow-to-full treatment (FFT) non-compliance
• continuing to track progress of water company Pollution Incident Reduction Plans (PIRPs) – making sure they contain effective actions so that pollution incident targets are achieved
• using evidence from EDM of storm overflows to show where water companies need to improve and where they should invest to carry out improvements – we will continue to take action against any unauthorised spills
• supporting water companies to develop investment plans through the WINEP for 2025 to 2030 to meet requirements of the government’s recent storm overflow reduction plan – this sets targets for water companies to improve all overflows beginning with discharges into or near designated bathing waters and high priority nature sites
• reviewing our reporting and the EPA to strengthen and broaden them for the 2026 to 2030 data years – to make sure we can assess water company progress towards performance expectations and statutory obligations as set out in our revised WISER (published May 2022)
• continuing to work closely with Ofwat on the potential for greater alignment of common and bespoke performance commitments for 2025 to 2030 (PR24) – seeking to align financial penalty and reward with environmental performance
• working with the water companies and other regulators as first cycle DWMPs are used to inform water company PR24 business plans – second cycle DWMPs will become statutory under the Environment Act 2021
• continuing to engage with water companies at chair, executive director and operational levels throughout the year – using the EPA and wider performance data to make it clear what is expected of them
• using planning processes to influence and secure water company investment in environmental enhancement and resilience
• encouraging water companies to work together and share best practice and innovative approaches that will benefit the environment

13. Conclusions

The 2022 EPA results show minimal sector improvement in star ratings compared to 2021. The sector as a whole needs to improve in order to achieve and sustain expected levels of regulatory and environmental performance. The majority of water companies are not meeting basic environmental requirements. Although we have acknowledged some improvements these results cannot be taken in isolation. They are set against the backdrop of poor and inconsistent results over recent years.

We are concerned that some companies will not or cannot change. Anglian Water and Thames Water repeatedly dominate serious incident numbers. Southern Water and South West Water have been rated red for their high number of total incidents for far too many years. These water companies in particular need to make radical changes now, but all water companies have areas to improve. None can be complacent, and static performance is not good enough as we continue to tighten the EPA to ensure progress towards environmental expectations. We are encouraged that Severn Trent Water have shown that industry leading (4 stars) is possible. We expect good practice sharing across the sector so that all water companies can achieve and sustain this.

The EPA is the only independent comparison of environmental performance for the sector. The targeted metrics identify where there is a performance problem that water companies need to address. We have seen that the EPA can motivate water companies to achieve better performance – both self-reporting and WTW compliance were at their highest levels ever in 2022.

The EPA is only part of the environmental performance picture. Beyond the EPA, water companies are rightly facing increased scrutiny on how they operate. We are reviewing our reporting and the EPA for 2026 to 2030 to incorporate more metrics and broaden visibility of wider performance data. This year’s EPA and wider performance data show that water companies continue to underperform. We are responding to this by significantly changing the way we regulate. Through our Water Industry Transformation Programme we will immediately put more specialist resources in place, informed by better data and intelligence. This is to ensure we uncover non-compliance and push for better performance from the sector. This must be a long-term plan - introducing fundamental and permanent change and a stronger approach to water industry regulation will take time.

Through our engagement with water companies we hear their commitment to do more and improve their performance. We need to see this in action. We urge water companies to refresh and modernise their action plans and implement solutions to tackle performance issues. We will regulate strongly but it is up to the water companies to make changes that secure long-term sustained outcomes for the environment.