Research and analysis

Water and sewerage companies in England: environmental performance report 2021

Updated 22 July 2022

Applies to England

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

1. Chair’s foreword

In 2021, the environmental performance of England’s 9 water and sewerage companies was the worst we have seen for years. Measured against our four-star rating, most of them went the wrong way: down. Four companies (Anglian, Thames, Wessex, Yorkshire Water) were rated only 2 stars, which means they require significant improvement. Two (Southern and South West Water) fell to 1 star, the bottom of our star ratings, meaning their performance was terrible across the board.

The sector’s performance on pollution was shocking, much worse than previous years. Serious pollution incidents increased to 62, the highest total since 2013. There were 8 of the most serious (category 1) incidents, compared with 3 in 2020 and most companies, 7 of the 9, were responsible for an increase in serious incidents compared to 2020.

Company directors let this occur and it is simply unacceptable. Over the years the public have seen water company executives and investors rewarded handsomely while the environment pays the price. The water companies are behaving like this for a simple reason: because they can. We intend to make it too painful for them to continue as they are.

Since 2015 the Environment Agency’s prosecutions against water companies have secured fines of over £138 million. We are increasing inspections of sewage treatment works; insisting that the companies put monitors on all their storm overflows, both on the network and at sewage treatment works and make the data public; and we have also begun the country’s largest ever investigation into environmental crime, involving all the companies, where we are looking at whether they have knowingly and deliberately broken the law in relation to the treatment and discharge of sewage.

But this is not enough. The water companies will only stop behaving like this if they are forced to. The amount a company can be fined for environmental crimes is unlimited, but fines currently handed down by the courts often amount to less than a Chief Executive’s salary. We need courts to impose much higher fines for serious and deliberate pollution incidents. The threat of significant impending financial penalties has an impact. Investors should no longer see England’s water monopolies as a one-way bet.

Repeat offenders can now expect criminal prosecutions for less serious environmental incidents where once the Environment Agency would have used civil powers. We would like to see prison sentences for Chief Executives and Board members whose companies are responsible for the most serious incidents. We would also like to see company directors being struck off so they cannot simply delete illegal environmental damage from their CV and move on to their next role.

We developed the Environmental Performance Assessment to provide a simple and clear comparison of the environmental performance of water and sewerage companies. This report does not cover every aspect of environmental performance but combined with Environment Agency data about the ecological status of rivers, developments in citizen science and our insistence that monitors are installed on all storm overflows, both on the network and at sewage treatment works, the public now have access to a damning evidence base.

Water companies exist to serve the public. Their environmental performance is a breach of trust. The polluter must pay.

Emma Howard Boyd, Chair of the Environment Agency

2. Performance messages for 2021

This report is about the 9 water and sewerage companies (called water companies in this report) that provide clean drinking water (water supply) and wastewater (sewerage) services. There are also a number of water only companies providing only water supply, and a number of companies providing localised water supply and sewerage services. These are not covered in this report. This report includes our Environmental Performance Assessment (EPA) for several core requirements as well as broader assessments of other aspects of environmental performance in 2021.

For 2021, the main performance messages for the sector are:

• sector performance for serious pollution incident numbers was much worse than 2020 – and there has been no sustained trend for improvement for several years in total incident numbers or compliance with conditions for discharging treated wastewater
• 2 of the 9 water companies are rated as poor (1 star) and 4 are rated as requiring improvement (2 stars) in our EPA – this represents much worse sector performance than 2020 driven both by our higher expectations and poorer performance
• serious pollution incidents (category 1 and 2) increased to 62, the highest since 2013 – 6 water companies performed significantly below target (red) for this EPA metric
• total pollution incidents (category 1 to 3) decreased slightly to 1,883 but show no trend for improvement since 2015 – Southern Water and South West Water continued to perform significantly below target (red) for the EPA sewerage incidents metric
• incident self-reporting remained at 77% which is below target (amber) for this EPA metric – Thames Water performed significantly below target (red) with only 65% of incidents self-reported
• 98.7% of sewage treatment works (STW) and water treatment works (WTW) were compliant with permit conditions for discharging treated wastewater showing no long term trend for improvement – Southern Water and South West Water performed significantly below target (red) for this EPA metric
• 99.5% of planned environmental improvement schemes were completed from the Water Industry National Environment Programme (WINEP) – 3 water companies failed to meet all of their requirements within planned deadlines
• 2 water companies (Southern Water and South West Water) performed significantly below target (red) for the Supply Demand Balance Index (SDBI) EPA metric

3. Environmental Performance Assessment

3.1 EPA for 2021

We introduced the EPA 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 2021 the 6 EPA metrics are:

• total pollution incidents (sewerage assets)
• serious pollution incidents (sewerage and water supply assets)
• self-reporting of pollution incidents (sewerage and water supply assets)
• discharge permit compliance (with STW and WTW numeric water quality limits for treated wastewater)
• delivery of the Water Industry National Environment Programme (WINEP)
• Supply Demand Balance Index (SDBI)

Please see the EPA results for 2021. Two of the 9 water companies are rated as poor (1 star), 4 are rated as requiring improvement (2 stars) and 3 are rated as industry leading (4 stars).

Ofwat (the economic regulator of the water sector) is using 2 of our EPA metrics as Common Performance Commitments (CPC) 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

Every 5 years we review the EPA aligning 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. This is to push improvements in water company performance and highlight a lack of progress by some. We want to ensure continuous improvement in standards across the sector.

Over this period we will rank water companies based on cumulative star ratings. This will highlight water company progress towards achieving and sustaining industry leading performance (4 stars).

Ranked EPA performance star ratings (out of 4) for the 9 water and sewerage companies 2021 to 2025

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

For historic results please see our Environmental Performance Assessment results 2011 to 2020. Company specific reports with data for 2011 to 2021 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.

For 2021 the increase in serious incidents (category 1 and 2) is the greatest concern. This is against the backdrop that overall incident numbers have not significantly improved for many years despite clear targets. Water companies need to take urgent action and raise their ambition and performance. Pollution incidents from water company assets can cause environmental harm to surface waters or groundwater. Water companies need to reduce the number of incidents so that they reduce their impact on the environment.

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 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. The increased monitoring of these is covered in section 7 of this report (progress with environmental improvement schemes).

You can find details of how we are taking action with the water companies in section 11 of this report (regulatory interventions).

4.1 Serious pollution incidents

Serious water quality pollution incidents (category 1 and 2) from sewerage and water supply assets increased to their highest number since 2013 (Figure 1). This rise is contrary to our performance expectation to trend towards zero. This was first set out to water companies in 2013 (for the period 2015 to 2020) and repeated in WISER (issued in 2017) for the period 2020 to 2025. Serious incident numbers remain far too high. In 2021:

• there were 62 serious incidents, an unacceptable increase from 44 in 2020, 52 in 2019 and 56 in 2018 and the highest since 2013
• more than half of serious incidents were from assets of 3 water companies (Anglian Water – 14, Southern Water – 12 and Thames Water – 12)
• 7 water companies had an increase in serious incidents compared to 2020, Southern Water had a threefold increase
• 6 water companies (Anglian Water, Southern Water, South West Water, Thames Water, Wessex Water, Yorkshire Water) performed significantly below target (red) for this EPA metric – the highest number of water companies since the introduction of EPA
• only 2 water companies (Northumbrian Water and United Utilities) achieved performance better than target (green) for this EPA metric – we expect this to be sustained
• there was 1 serious incident from a water supply asset (Severn Trent Water) compared to 5 in 2020, 4 in 2019, 8 in 2018 and the record 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 2005 to 2021

For the most serious (category 1) incidents, in 2021 there were 8. This compares to 3 in 2020, 11 in 2019 and 9 in 2018.

4.2 Total pollution incidents

The total number of water quality pollution incidents from sewerage and water supply assets shows no trend for improvement since 2015 (Figure 2). The sector has a long way to go to meet our WISER performance expectation for the period 2020 to 2025. This requires at least a 40% reduction compared to number of incidents (1,902) recorded in 2016. In 2021:

• there were 1,883 incidents, a decrease from 1,919 in 2020 and 2,204 in 2019, but an increase from 1,863 in 2018 and 1,827 in 2017
• 4 water companies reduced pollution incidents compared to the year before, but sector numbers remain too high and we expect greater sustained improvements

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 2005 to 2021

Our EPA metric assesses the total number of water quality pollution incidents from water company sewerage assets. In 2021:

• there were 1,677 sewerage incidents, slightly less than 1,715 in 2020 and 1,952 in 2019 but more than 1,623 in 2018 and 1,627 in 2017 – there is no trend for improvement
• Southern Water and South West Water were the only 2 water companies to perform significantly below target (red) for this EPA metric – Southern Water for the third year in a row and South West Water for the eleventh year in a row (since the start of the EPA)
• 4 out of 9 water companies performed better than target (green) for this EPA metric (Northumbrian Water, Severn Trent Water, United Utilities and Wessex Water)
• there would have been 505 fewer sewerage pollution incidents and less environmental harm if all water companies had achieved green EPA status – equivalent to at least a 30% reduction on the actual number

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. The sector performed slightly below our WISER performance expectation for the period 2020 to 2025 for high levels of self-reporting. In 2021:

• 77% of recorded incidents were self-reported by water companies, the same as 2020, compared to 80% in 2019 and 76% in the previous 2 years – there is no improving trend
• 88% of recorded incidents were self-reported from just PS and STW combined – this failed to meet the additional EPA target of 90% for these assets
• Thames Water performed significantly below target (red) for this EPA metric with only 65% self-reporting
• only 4 out of 9 water companies performed better than target (green) for this EPA metric (Northumbrian Water, Severn Trent Water, Southern Water and Wessex Water)
• only 56% (35 out of 62) of serious incidents (category 1 and category 2) were self-reported by the water companies which is concerning given their impact on the environment

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 11 of this report (regulatory interventions).

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

The increased monitoring of storm overflows is covered in section 7 of this report (progress with environmental improvement schemes). 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. Compliance declined compared to 2020 and there has been no sustained trend of improvement for several years (Figure 3). Water companies are not yet demonstrating that their plans will meet our WISER performance expectation for the period 2020 to 2025 of 100% compliance. In 2021:

• 98.7% of STW and WTW were compliant, compared to 99.2% in 2020, 98.7% in 2019 and 98.6% in the previous 3 years
• out of 3,823 STW and WTW permitted discharge outlets there were 49 non-compliant sites compared to 31 in 2020 and 49 in 2019
• 2 water companies (Southern Water and South West Water) performed significantly below target (red) for this EPA metric
• there would have been 18 fewer non-compliant sites if all water companies had achieved green EPA status

Figure 3. Number of STW (and from 2016 including WTW) failing discharge permit numeric limits and trend for the 9 water and sewerage companies 2005 to 2021

As with wastewater from STW, adequate treatment of discharges from WTW is essential to make sure they do not pollute the receiving environment.

In recent years there had been an improving trend, but for 2021 we are concerned that WTW compliance has declined (96.8% compared to 97.2% in 2020) and continues to be far lower than compliance at STW (98.9%). In 2021:

• out of 277 WTW permitted discharge outlets, 9 WTW were non-compliant, compared to 8 in 2020, 12 in 2019 and 2018, 13 in 2017 and 20 in 2016
• only 2 companies had 100% compliance at WTW (Wessex Water and Yorkshire Water)

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. In 2021, out of 1,234 licences, 16 were recorded as non-compliant (98.7% compliance).

We are developing a new system for collating data, and a new EPA metric for assessing compliance.

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). In 2021:

• 1 Anglian Water permitted operation was assessed as band E and 1 as band D – the rest of the sector operations were assessed as band C or better, an improvement on the 4 band D operations in 2020
• there were 27 incidents (including 4 significant impacts to air and 20 minor impact to air) – a considerable increase on 2019 and 2020 when 11 incidents were recorded in each year
• over half of the incidents were related to 2 permitted operations – 6 from an Anglian Water site and 8 from a Southern Water site

5.4 Reservoir compliance

Water companies operate 611 large raised reservoirs, with legal requirements for them to be supervised and regularly inspected by qualified civil engineers. In 2021, 6 were recorded as non-compliant (3 Northumbrian Water, 2 United Utilities and 1 Yorkshire Water).

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 April 2022. Water company compliance for onsite flood plans will be reported in the 2022 report.

Further recommendations to improve reservoir safety are included in the independent reservoir safety review report. We will continue to work with water companies and the wider reservoir sector to address these review recommendations. We will support them in maintaining high standards of reservoir safety.

6. Sludge disposal and use

In 2021, the water companies produced 801,721 tonnes of sewage sludge – 94.4% of this was used in agriculture (across 150,376 hectares of land). We reviewed water company data to check compliance with the Sludge (Use in Agriculture) Regulations (SUiAR), the Environmental Permitting Regulations (EPR) and the water industry voluntary Safe Sludge Matrix. We continued to suspend the EPA sludge disposal and use metric whilst we completed a review of our compliance assessment approach.

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. 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 in 2023. We continue to assess water company sludge disposal and use and are enabling innovation through the price review process to achieve good environmental outcomes.

7. Progress with environmental improvement schemes

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 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 2022:

• 99.5% of WINEP schemes (2,173 out of 2,185) had met requirements within planned deadlines
• South West Water performed significantly below target (red) for this EPA metric due to 9 schemes not meeting requirements within planned deadlines (98.0%)
• 2 water companies performed below target (amber) for this EPA metric – Southern Water due to 2 schemes (98.4%) and Thames Water for 1 scheme (99.5%) not meeting requirements within planned deadlines
• 6 water companies met all requirements within planned deadlines for 100% of their schemes

Across the sector there are around 14,346 storm overflows operated by the 9 water companies. Since 2013 we have required the water companies to install Event Duration Monitoring (EDM) on storm overflows (to monitor how often and for how long they are used). Water companies have an obligation to monitor all storm overflows by December 2023. EDM coverage and data do not form part of the EPA WINEP delivery metric. We have published the EDM storm overflow annual return dataset received from water companies. This shows how often and how long the monitored storm overflows operated during 2021. Water companies provided spill data for 12,272 storm overflows. The 2021 dataset also includes water company reasons for performance issues with monitors and reasons for high spill counts.

8. Security of water supply

The EPA SDBI metric assesses how the actual supply demand balance has performed compared to what is in water company water resource management plans (WRMPs). Expected performance is for water companies to have a score of 100. For the period April 2021 to March 2022:

• 7 of the 9 water companies reported a score of 100 and green status in the EPA
• South West Water performed significantly below target (red) with a score of less than 99
• Southern Water performed significantly below target (red) with a score of 97

9. Water resources planning

This section provides water company information for the period April 2020 to March 2021, which was impacted by COVID-19 restrictions. All water companies report annually on progress with implementing their WRMPs. We review these and report our findings to Department for Environment, Food and Rural Affairs (Defra). Southern Water was the only company with significant issues. It had a significant supply shortage due to outage (assets not in operation) and non-delivery of a new supply scheme.

There was a noticeable change in water demands across the country with non-household demand dropping and household demand increasing because of COVID-19 restrictions. This was challenging for some water companies. We expect all water companies to continue to monitor demand and reassess what ‘normal’ demand will be in the future.

April 2020 to March 2021 is considered to be a normal year in terms of rainfall but this masks local variations. Some water companies reported it as a ‘partial dry’ year, noting the very hot and dry spring and early summer months. The months of dry, warm weather and COVID-19 restrictions meant far more people were at home, and the water companies’ reported per capita consumption (PCC) figures reflect this.

From April 2020 to March 2021:

• average household PCC was 148 litres per head per day, an increase from 137.5 litres per head per day the year before
• all water companies reported PCC significantly higher than they had planned for a dry year

We want all water companies to proactively seek improvements in the efficient use of water in England. Ofwat has set a target for all water companies to meet a 15% reduction in leakage by the end of March 2025. Most water companies have planned for an average 16% reduction in their 2020 WRMPs. We expect them to explore innovative approaches to further 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 2020 to March 2021:

• total leakage for all water companies was 2,336 megalitres per day, which was an increase from the 2,272 in the previous year
• 4 water companies reduced leakage to below forecast levels
• 5 water companies reported leakage levels above forecast (including Yorkshire Water 13% above and Anglian Water 7% above)

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

From April 2020 to March 2021:

• household metering including unoccupied properties was at 56.4%, an increase from 53.9% the previous year but still below that forecast
• Anglian Water achieved their planned level of metering, with Northumbrian Water and United Utilities only slightly below their planned level of metering
• most water companies said that COVID-19 limited delivery of planned metering programmes

10. Flood and coastal erosion risk management (FCERM)

Under the Flood and Water Management Act 2010, water companies are risk management authorities (RMAs). They must act in a manner consistent with the FCERM Strategy for England and have a duty to cooperate with other RMAs. Between April 2021 and March 2022 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
• responded to flooding incidents over another challenging winter period
• developed their drainage and wastewater management plans (DWMPs), publishing the options development appraisal (ODA) phase of the plans
• continued to innovate and share good practice

Between April 2021 and March 2022, water companies invested:

• £65.2 million to reduce the risk of sewer flooding to properties
• £295.8 million to maintain the public sewer system to prevent blockages and flooding
• £7 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 innovation and partnership working this year. These include:

• Anglian Water’s work with the Future Fens Integrated Adaptation Scheme
• United Utilities and Severn Trent Water’s work in the Moors for the Future partnership
• some excellent nature-based solutions and decision support tools, such as Wessex Water’s application of the natural flood management and sustainable urban drainage studio tool – a move from traditional solutions to more catchment and nature-based ones will provide more integrated outcomes for communities and the environment

All water companies are making good progress with their DWMPs with some good engagement events to work through the ODAs. Water companies published their draft plans in June and July 2022.

Data sharing is still inconsistent across the sector. Wessex Water has developed a data sharing platform to allow easy access to their data sets. There is widespread support for greater data sharing across the RMA community as a means of improving delivery of flood risk management outcomes.

The FCERM Strategy Roadmap was launched in June 2022. It contains a suite of practical actions, by completing them all contributing partners will ensure we remain on track to achieve the Strategy’s 2100 vision. The Roadmap contains actions from the water industry, showing continued commitment to improve the nation’s resilience to flooding and coastal change between now and 2026.

Some water companies are committing to innovation in flood and coastal risk management. This is through direct involvement in local resilience projects delivered by the £150m Flood and Coastal Resilience Innovation Programme.

11. 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.

11.1 Enforcement and sanctions

The Environment Agency enforcement and sanctions policy sets out how we conduct enforcement activity in relation to environmental offences. The formal options we have include a written warning, enforcement notices, undertaking a prosecution, issuing a Variable Monetary Penalty or accepting an Enforcement Undertaking (EU) offer.

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 and 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 breaches where there is serious environmental harm and a high level of culpability (negligent or higher). 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 EU 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.

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 currently undertaking our largest investigation of all water companies into potential STW flow-to-full treatment (FFT) non-compliance.

The Definitive Guideline on Sentencing of Environmental offences came into force on 1 July 2014. It improved guidance and removed inconsistencies in sentencing, including the levels of fines being given. Between 2015 and 2021 we completed 48 prosecutions of water companies (some involving multiple cases) securing fines of over £137 million. In 2021:

• we completed 7 prosecutions against 5 different water companies as a result of which total fines of £102,490,000 were imposed – all prosecutions resulted from pollution incidents
• prosecution fines ranged from £150,000 to £90,000,000
• we accepted 9 EU offers from 5 of the water companies totalling £1,703,272, ranging from £50,000 to £368,752

By the end of 2021 we had 6 further prosecutions in court.

Enforcement and sanctions for the 9 water and sewerage companies 2015 to 2021

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	11	£21,589,334	15	£1,435,900
2018	3	£2,227,000	15	£3,432,150
2019	5	£1,297,000	11	£2,429,760
2020	3	£852,000	14	£2,465,901
2021	7	£102,490,000	9	£1,703,272

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.

11.2 Improving water company performance

All water companies need to take responsibility to tackle their specific performance issues. It is their responsibility to comply with the law. We have set clear expectations for them since 2013.

To focus the water companies, we are:

• toughening our regulation – placing greater emphasis on the root causes of non-compliance and pollution incidents and making sure that our company action plans are targeted and effective
• undertaking our largest investigation of all water companies into potential STW flow-to-full treatment (FFT) non-compliance
• continuing to review progress of Pollution Incident Reduction Plans (PIRPs) produced by them – ensuring their actions are delivered to understand and reduce risks of pollution incidents
• meeting our statutory duty under the Environment Act 2021 to publish EDM data in relation to the operation of storm overflows – the evidence will show where water companies need to focus their investment to carry out investigations and improvements
• using EDM data to inform the Defra Storm Overflow Reduction Plan as well as our operational assessment and compliance work
• supporting Defra on the Storm Overflow Discharge Reduction Plan (which Defra will publish in September 2022) – this will set a clear and targeted programme of improvements for water companies
• promoting the price review (PR24) WISER (published on GOV.UK in May 2022) which sets out our performance expectations for 2026 to 2030 – this will inform our next EPA review ready for the 2026 to 2030 data reporting years
• continuing to work closely with Ofwat on the potential for greater use of the EPA in common and bespoke performance commitments for 2025 to 2030 (PR24)
• working with them, Defra and Ofwat to review water company draft DWMPs – these will inform PR24 business plans and the development of mechanisms to secure the delivery of statutory DWMPs
• continuing to engage with them at Chair, Executive Director and operational levels throughout the year – looking at the EPA and wider performance we make it clear what is expected of them
• encouraging them to work together and share best practice and innovative approaches that will benefit the environment

12. Conclusions

We use the EPA to ensure that water companies meet several core requirements and to highlight where they are not. As two thirds of the sector were rated no better than requiring improvement (2 stars) or poor (1 star), this was clearly a challenge for most companies in 2021.

This is the first year we are reporting on the revised EPA (for 2021 to 2025). We have deliberately tightened metric thresholds to set stretching targets that will push companies to meet regulatory requirements and our expectations. During this EPA period the challenge will increase to ensure companies achieve better environmental outcomes. Companies cannot be complacent with static performance and expect the same results. We welcome companies that are innovating to meet current and future challenges however this should not be at the detriment of complying with the law.

Some water companies have more to do than others. Southern Water and South West Water continued to perform well below target for most EPA metrics. Seven water companies had an increase in serious incident numbers compared to 2020 which resulted in the unacceptable sector rise – the highest number of serious incidents since 2013. Across the other EPA metrics companies must significantly increase their efforts to meet all performance targets and sustain performance at expected levels.

Sustaining excellent performance means operating in a way that best protects people and the environment. Any company falling short of this or not motivated to improve is not acceptable and reflects poorly on the rest of the sector.