Revamped ratings to drive better water company performance
New and tighter metrics will give a more rounded view of water company performance and drive improvement.
The Environment Agency is pushing water companies to strengthen their efforts to improve the environment by tightening up the way it ranks and tracks their performance. It will look like the number of pollution incidents has increased – however the guidance creates greater transparency in the way water companies record and report pollution incidents.
From 2027, the annual Environmental Performance Assessment (EPA) reporting will look different. Companies will no longer be given a star rating but will instead be assigned a descriptor and number rating to more accurately reflect their performance.
Previously, companies were given a rating of 1 to 4 stars. As part of the new methodology, companies will instead be given a numeric rating from 1 to 5, with only those that achieve the highest standards across the board rated ‘Excellent’ and the worst performers rated as ‘Failing’. These new ratings will be phased in as all of the new metrics come into effect.
New metrics showing how well companies have fared are also being introduced, while existing ones are strengthened. The new metrics include assessments on the reliability of water company data from event duration monitors at storm overflows and information on how many spills there are on dry days.
New Water Industry Regulation Incidents (WIRI) guidance states that water companies will no longer be able to downgrade incidents to say there has been no impact on the environment if any amount of pollution has entered a waterway. This will provide both more transparency to customers and help us uncover the scale of the problem at hand.
Environment Agency Chair Alan Lovell said:
We have been consistently clear that all water companies must do more to address their impact on the environment.
To help them achieve this, we are shining a light on companies’ performance to ensure the industry has a roadmap for cleaning up their act.
The new methodology and guidance are the latest steps in our transformation plan to improve the way we regulate. With better technology, a larger, skilled workforce and new legal powers, we’re driving better water company performance to protect communities and nature.
The new EPA Methodology and WIRI guidance is part of a wider effort by the EA to strengthen its grip on how water companies report pollution incidents. New technology is being used to detect ‘dry day spills’ and water companies will now have to report all pollution incidents to the Agency, no matter how small.
The changes are rolling out across England and Wales following a joint consultation by the Environment Agency and Natural Resources Wales.
Becky Favager, Head of Regulation and Permitting at Natural Resources Wales said:
We continue to push water companies in Wales to perform better and reduce their impact on the environment, using the full range of regulatory and enforcement tools available to us. Refining the annual Environmental Performance Assessment is one of the measures we are taking to make our reporting clearer, provide a better overall picture of the impact of water companies on the environment and strengthen our regulatory response.
Alongside this, we are also increasing our frontline capacity, introducing a new team to increase monitoring of water company discharges, compliance checks and audits.
The changes being introduced now will support the wider reforms for Welsh regulation of the sector as outlined in the recent Independent Water Commission report.
Water Minister Emma Hardy said:
We are taking firm action to clean up our rivers, lakes and seas.
The old rating system for incidents was too complex and opaque. This new approach is clear, transparent, and leaves no room for doubt.
Water companies, regulators and the public will now have a much sharper view of progress and we will hold them to account every step of the way.
The EA’s expectations for water companies are clear - there should be a trend to zero serious pollution incidents by 2025, a reduction in all pollution incidents and high levels of water company self-reporting. It is evident from the Pollution Incident Report published in July that some companies are failing to meet these targets.
So far, the EA is on track to deliver 10,000 inspections of water company assets this year (2025/26) and we will continue to work closely with government and fellow regulators to hold companies to account.
Notes to editors:
EPA Methodology
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EPA metrics are reviewed and consulted on every five years
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The new methodology follows a joint consultation with Natural Resources Wales and will apply to data collected from 1 January 2026.
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The first report using the updated methodology will be released in 2027, for data from 2026.
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The new metrics and 5th rating will be phased in between 2026 and 2030. They provide a good foundation for future enhanced performance reporting under the new single regulator for the sector.
Rating calculations
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Numeric ratings are applied to each water and sewerage company after assessment of the live EPA metrics, including core metrics. They are based on ‘red/amber/green (RAG)’ status. The numeric rating system adapts to the varying number of metrics during this 5 year EPA period.
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The 5th rating will only become live when the ‘total pollution incidents’ metric has live RAG thresholds. At any time before this, all green metrics would achieve a rating of 4 as the highest attainment.
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We will continue to report numbers and the narrative on the total pollution incident metric.
The new EPA rating system descriptors with performance criteria are outlined below: (details are set out in the methodology)
| Rating | Descriptors | Rating requirements |
|---|---|---|
| 5 | Excellent | Green for all metrics |
| 4 | *Good | Green for nearly all metrics |
| 3 | Fair | Mostly green with some amber metrics, or 1 red metric if not a core metric, combined with nearly all green metrics |
| 2 | Improvement required | 2 red metrics, or 1 red metric (core or not core) with combinations of amber and green metrics, or mostly amber metrics |
| 1 | Failing | 3 or more red metrics |
Water Industry Regulation Incidents Guidance
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On 15 October, the EA is also releasing Water Industry Regulation Incidents (WIRI) Guidance.
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This internal guidance explains how incidents involving water company assets will be recorded and sets out expectations of incident self-reporting by the water companies. This guidance extends to incidents involving water company assets that are reported to us by an alternative source.
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The main changes to guidance are:
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to incorporate reporting of ‘Dry Day Spills’ (DDS) which are pollution incidents identified using new tools and analysis from storm overflow Event Duration Monitors (EDM)
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removing water companies’ ability to use No Impact Claims to have Cat 3 water pollution incidents downgraded to Cat 4 incidents if polluting matter enters a waterbody. We are removing this provision from the guidance so that any pollution entering waters will be categorised as a Category 3 minor impact as a minimum. (NB this does not mean that we are removing Category 4 incidents). This brings water companies in line with other sectors we regulate.
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requiring water companies to report all water pollution incidents to us no matter how small
Updates to this page
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Minor change to Ministerial quote
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First published.