Research and analysis

Water and sewerage companies in England: environmental performance report for 2020

Updated 14 January 2022

Applies to England

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

1. Chair’s foreword

The progress made against the Environmental Performance Assessment’s (EPA) metrics over the last 5 years shows that clear targets and regulatory focus combined with investment in the environment delivers change. From 2020’s results there is welcome news that for the first time over half the sector has achieved the highest rating (industry leading status, 4 stars), of those Wessex Water, United Utilities and Severn Trent Water have sustained industry leading performance for most of the 5 year period. Northumbrian and Yorkshire Water have also shown improvements based on a range of measures including pollution incidents, and compliance with permits.

However, the performance of some companies gives us serious cause for concern. Southern Water and South West Water remain at the bottom of the table. South West Water has received a 2 star rating for the entire 5 years of the EPA and this drags down the whole sector’s reputation. Anglian and Thames Water have not shown significant improvement over the past 5 years, and more than half of all serious incidents in 2020 were from the assets of these 2 companies.

When under pressure on the issue of pollution, there is still a tendency for some water companies to reach for excuses rather than taking action to reduce serious pollution incidents to zero. Last week’s record £90 million fine against Southern Water for causing 6,971 unpermitted sewage discharges, shows that fines for environmental offences are starting to reach the same level as the highest fines for crimes in financial services. No one should profit from undermining environmental laws.

True change depends not only on deterrence actions but also corporate culture inspired by shareholders. At present, a number of water company chairs and chief executives are relatively new to post. Most have expressed a wish to improve their company’s environmental performance. We look to them to turn those promises into action. This is a good moment to encourage improvements to the cultural ecosystem of the water sector and we are working closely with Ofwat to this end. The sector coped well with the coronavirus pandemic and in May, water companies committed over £850 million of new investment and brought forward £1.9 billion of future planned environmental projects to contribute to a Green Recovery. The sector has also set itself the goal of net zero by 2030, and that leadership in tackling the root cause of the climate emergency should be welcomed, especially if coupled with a matching effort to reduction pollution incidents and prepare the country for climate impacts like floods and droughts.

While we have seen significant improvements in water quality over the last 20 years, the bottom line is England’s rivers are too polluted. The 25 Year Environment Plan aims for at least three quarters of waters to be close to their natural state but just 14% of rivers are. The main sources of pollution are agriculture and rural land management (40%), the water industry (35%) and urban and transport (18%). Around 32% of water bodies are failing good ecological status due to discharges from sewage treatment works, compared to 7% which are failing due to storm overflows; we want to see substantial improvements on both.

Analysis of just over 260,000 blockages on the public sewer network, in 2019/2020 water company data, suggests 40% of pollution incidents were caused by blockages and almost 60% of these incidents are caused by wet wipes. Northumbrian Water’s ‘Bin the Wipe’ campaign has reduced the number of wipes found in sewers by influencing customers to stop flushing wet wipes down the toilet. We need retailers to take similar action.

Some water companies’ stakeholders will find much to celebrate in this report, some will most certainly not. We look forward to continuing to work with companies that are truly committed to enhancing the environment and will not hesitate to hold those that don’t to account.

Emma Howard Boyd, Chair of the Environment Agency

2. Main messages

This report is about the 9 water and sewerage companies (called water companies in this report) that provide clean (drinking) water and waste water (sewerage) services. There are also a number of water only companies providing only drinking water, and a number of companies providing localised drinking water and sewerage services. These are not covered in this report. This report includes our Environmental Performance Assessment (EPA) as well as broader assessments of other aspects of environmental performance in 2020.

2.1 Coronavirus (COVID-19)

Since March 2020 we have recognised that government restrictions due to COVID-19 have created unusual challenges for all water companies. These include staff availability, chemical supply and changing patterns of customer demand for drinking water and sewerage services with people required to stay at home.

We worked closely with the industry, through Water UK (water companies’ trade association), to make sure issues were recognised quickly and mechanisms developed to address them. We then worked with individual companies to help them manage the disruption to make sure they maintained operational compliance and protected the environment. This is highlighted in the relevant sections of the report.

2.2 Performance messages for 2020

For 2020, the main performance messages for the sector are:

• 5 companies, the most ever, achieved the industry leading EPA rating (4 stars) – we were clear what was required and these companies have shown it is possible to meet environmental targets
• Severn Trent Water, United Utilities and Wessex Water sustained strong performance, achieving industry leading status (4 stars) at least 3 times in the last 5 years
• serious incidents (category 1 and 2) declined for the second year in a row and were at the lowest number ever – however the sector as a whole needs to accelerate to zero serious incidents
• 99.2% of sewage treatment works (STW) and water treatment works (WTW) were compliant with permit conditions for discharging treated waste water – this is the highest number ever of treatment sites (not storm overflows) meeting pollutant numeric limits set to protect the environment
• the total number of pollution incidents (category 1 to 3) was less than in 2019, but the second highest number since 2015
• incident self-reporting at 77% was lower than the record high of 80% in 2019 – but this was still the second highest rate of self-reporting in the period 2011 to 2020
• we rated Southern Water and South West Water as requiring improvement (2 stars) – their performance has been consistently unacceptable during the last 5 years
• Southern Water and South West Water were significantly below target (red) for the EPA sewerage incidents metric – South West Water for the tenth year in a row
• South West Water was the only company significantly below target (red) for the EPA serious incidents metric – but over half of serious incidents were due to Anglian Water and Thames Water
• 98.2% of planned environmental improvement schemes were completed against Asset Management Plan (AMP) targets, with 3 companies failing to fully meet their deadlines
• Anglian Water and South West Water failed to achieve a score of 100 for the Security of Supply Index (SoSI) for water availability
• we assessed water company sludge performance data but continued to suspend the sludge disposal and use metric
• the sector has not met the performance expectations for 2015 to 2020 which we set out in 2013 – water companies still need to make and sustain substantial improvements

3. Environmental Performance Assessment for 2020

Please see the EPA results for 2020 and a summary of previous EPA results. Company specific reports with data for 2011 to 2020 are also available.

We introduced the EPA as a tool for comparing performance between water companies and across years. The EPA forms part of a wider assessment of performance, including current year-to-date data that we consider during annual performance meetings with the companies. The EPA metrics measure performance associated with:

• reducing pollution incidents and increasing company reporting of incidents
• complying with discharge permits for STW and WTW
• completing environmental improvement schemes
• providing secure supplies of water (‘security of supply’)

We have suspended the sludge disposal and use metric. Instead section 7 of this report provides an update on our compliance assessment approach.

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.

4. Five year performance review

4.1 EPA star ratings

Based on performance across all of the EPA metrics, star ratings have been applied each year to all water companies. We expected all companies to work towards industry leading performance (4 stars) during the last 5 years. A small number of companies (Severn Trent Water, United Utilities and Wessex Water) performed strongly during the last 5 years (achieved 4 stars at least 3 times). Our regulation shows it is possible for water companies to meet environmental targets. However, Southern Water and South West Water’s performance has been consistently unacceptable. The remaining companies have failed to make any significant progress to achieve and maintain leading performance. We will continue to push improvements across the sector.

EPA performance star ratings (out of 4) for the 9 water and sewerage companies 2016 to 2020

Year	2016	2017	2018	2019	2020	Total (out of 20 stars)
Wessex Water	4 stars	4 stars	3 stars	4 stars	4 stars	19 stars
Severn Trent Water	3 stars	4 stars	3 stars	4 stars	4 stars	18 stars
United Utilities	4 stars	4 stars	3 stars	3 stars	4 stars	18 stars
Yorkshire Water	3 stars	3 stars	2 stars	3 stars	4 stars	15 stars
Anglian Water	3 stars	3 stars	3 stars	2 stars	3 stars	14 stars
Northumbrian Water	2 stars	2 stars	4 stars	2 stars	4 stars	14 stars
Thames Water	2 stars	3 stars	3 stars	3 stars	3 stars	14 stars
Southern Water	3 stars	3 stars	2 stars	1 star	2 stars	11 stars
South West Water	2 stars	2 stars	2 stars	2 stars	2 stars	10 stars

4.2 Performance expectations (2015 to 2020)

In 2013 we set out our expectations to the water companies for the period 2015 to 2020 in a number of areas, including their operational performance. We had the following expectations of companies that are directly relevant to the EPA:

• a plan in place to achieve 100% compliance for all licences and permits, and 100% compliance with water quality discharge permit look-up table (LUT) conditions (where a limit cannot be exceeded more than a specified number of times in a 12 month period)
• a reduction (at least 50% compared to 2012) in serious pollution incidents (category 1 and 2), trending towards zero by 2020
• a trend to minimise all pollution incidents (category 1 to 3) by 2020, with at least a third reduction compared to 2012
• high levels of self-reporting of pollution incidents, with at least 75% of incidents self-reported by 2020
• that management of sewage sludge treatment and re-use should not cause pollution and must follow the Sludge (Use in Agriculture) Regulations (SUiAR) and the Code of Practice for Managing Sewage Sludge, Slurry and Silage or Environmental Permitting Regulations (EPR)
• environmental improvement schemes to be planned well and completed as agreed, for example AMP and water resources management plans (WRMPs)
• security of supply outcomes to be achieved as defined in WRMPs

Now the period has ended, we have assessed whether the expectations that are directly relevant to the EPA were met by the sector in 2020. Our findings are in the relevant sections of this report.

The majority of water companies translated our expectations into performance commitments and associated Outcome Delivery Incentives for their 2015 to 2020 business plans. These were assessed by Ofwat (the economic regulator of the water sector). In 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 AMP period 2020 to 2025.

5. 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.

The 2020 performance data shows that the sector still needs to make substantial improvements to meet EPA targets and our expectations for both serious (category 1 and 2) and total (category 1 to 3) pollution incidents. 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 sewage to rivers or the sea at times of heavy rainfall or snow melt to prevent it 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 8 of this report (progress with environmental improvement schemes).

You can find details of how we are taking action with the water companies in section 12 of this report (regulatory interventions).

5.1 Serious pollution incidents

Serious water quality pollution incidents from sewerage and clean water assets improved for the second consecutive year to the lowest number ever (Figure 1). However, our performance expectation for water companies in the period 2015 to 2020 was that there should be a trend to zero. We also expected at least a 50% reduction compared to the 60 serious incidents in 2012. Although 4 companies did achieve this in 2020, the sector as a whole has not met this expectation (with only a 27% reduction). Serious incident numbers remain too high. In 2020:

• there were 44 serious incidents, an improvement on 52 in 2019 and 56 in 2018
• more than half of serious incidents were from assets of 2 companies (Anglian Water – 11 and Thames Water – 13)
• 3 companies (Northumbrian Water, South West Water and Wessex Water) saw an increase in serious incidents compared to 2019
• United Utilities again achieved the best performance being the only company to have no serious pollution incidents for the second year in a row

Figure 1. Number of serious pollution incidents (category 1 and 2) from sewerage and clean water assets, and trend for the 9 water and sewerage companies 2005 to 2020

Our EPA metric is for serious water quality pollution incidents from water company sewerage assets. In 2020:

• there were 39 serious pollution incidents, less than 48 in 2018 and 2019, and 38 in 2017
• South West Water was the only company significantly below target (red) for this EPA metric
• only 3 companies (Northumbrian Water, Severn Trent Water and United Utilities) achieved performance better than targeted (green) for this EPA metric
• 7 companies maintained or improved performance compared to 2019, of which 3 improved their EPA status

There were 5 serious water quality pollution incidents from water company clean water assets in 2020, compared to 4 in 2019, 8 in 2018 and the record high of 14 in 2017.

There was an improvement in the number of the most serious (category 1) incidents from water company sewerage assets. In 2020:

• there were 3, compared to 11 in 2019, 9 in 2018, and the previous lowest levels of 4 per year in 2014 and 2015
• 7 out of 9 companies had zero category 1 incidents

United Utilities performed better than target (green) throughout the last 5 years setting an example for the rest of the sector.

5.2 Total pollution incidents

The total number of water quality pollution incidents from sewerage and clean water assets was less than the unacceptable performance in 2019. However it was the second highest number since 2015 (Figure 2). Our performance expectation for the water companies in the period 2015 to 2020 was at least a third reduction in pollution incidents compared to 2012. Although 5 companies out of 9 did achieve this in 2020, the sector as a whole did not quite achieve this in 2020 (31% reduction). They only achieved the third reduction once in 2017 – we are disappointed that this was not maintained. In 2020:

• there were 1,919 incidents, a decrease from 2,204 in 2019, but an increase from 1,863 in 2018 and 1,827 in 2017
• 7 companies reduced pollution incidents compared to the year before, but numbers remain too high

Figure 2. Number of pollution incidents (category 1 to 3) from sewerage and clean water assets, and trend for the 9 water and sewerage companies 2005 to 2020

Our EPA metric is for total water quality pollution incidents from water company sewerage assets. In 2020:

• there were 1,715 sewerage incidents, less than 1,952 in 2019 but more than 1,623 in 2018
• Southern Water and South West Water both performed significantly below target (red) for this EPA metric – Southern Water for the second year in a row and South West Water for the tenth year in a row
• 5 out of 9 companies performed better than target (green) for this EPA metric - the most companies to do so in the last 5 years
• there would have been 513 fewer sewerage pollution incidents and less environmental harm if all companies had achieved green – equivalent to at least a 30% reduction on the actual number

5.3 Self-reporting of incidents

Incident self-reporting (when a water company reports a pollution incident to us before others do) was lower than the record high in 2019. However it was still the second highest rate of self-reporting in the period 2011 to 2020. For the fourth year in a row the sector met our expectation for the period 2015 to 2020 that at least 75% of incidents each year were to be self-reported. In 2020:

• 77% of recorded incidents were self-reported by the water companies, compared to 80% in 2019 and 76% in the previous 2 years
• 3 of the water companies did not achieve the EPA target (green) – Thames Water performed the worst at 63%
• Southern Water and Wessex Water achieved the best performance in the sector, self-reporting 88% and 85% of their incidents respectively

6. Compliance with licences and permits

All water companies have licences and permits and we expect them to achieve 100% compliance. We set conditions to control the impact that licenced and permitted activities are allowed to have, based on the nature and sensitivity of the local environment. When companies do not comply with those conditions, damage to the environment can happen. You can find details of how we are taking action with the water companies in section 12 of this report (regulatory interventions).

The increased monitoring of storm overflows is covered in section 8 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.

6.1 Discharge permit compliance (numeric)

This section is about water company compliance with permits to discharge treated waste water 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. Water companies must comply with these to reduce their impact and protect the water environment. Overall compliance with these conditions was the highest ever in the period 2005 to 2020. In 2020:

• 99.2% of sites were compliant, compared to 98.7% in 2019 and 98.6% in the previous 3 years
• out of 3,850 STW and WTW there were 31 sites that failed to comply with their permit, compared to 49 in 2019 (Figure 3)
• 8 of the 9 companies performed better than the EPA target (green) – we want all companies to build on this performance in future years
• 6 out of 31 failing sites had LUT failures (where limits were exceeded more than a specified number of times in a 12 month period) equivalent to 99.8% compliance – our expectation of 100% compliance with LUT conditions was only met by 5 companies
• only 1 water company (Southern Water) failed to achieve the EPA target (green), having 10 failing 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 2005 to 2020

As with waste water from STW, adequate treatment of discharges from WTW is essential to make sure they do not pollute the receiving environment. Although we welcome the improving trend, we are concerned that WTW compliance (97.2%) is far lower than compliance at STW (99.4%). In 2020:

• out of 289 WTW sites, 8 were non-compliant, compared to 12 in 2019 and 2018, 13 in 2017 and 20 in 2016
• 4 companies had 100% compliance at WTW (Northumbrian Water, Southern Water, Thames Water and Yorkshire Water)

During 2020 we recognised that COVID-19 caused unusual demands on sewerage and clean water services, and that water companies faced operational restrictions due to government advice. To help them cope with the disruption, we enabled companies to apply for local enforcement positions (LEPs) where compliance with a permit was temporarily compromised. We granted 8 LEPs for 2 water companies (Anglian Water and United Utilities) – both companies supplied evidence to show that permit failures at STW were due to circumstances only arising out of COVID-19.

6.2 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 2020:

• out of 1,238 licences, 19 were recorded as non-compliant (98.5% compliance)

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

6.3 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 2020:

• 4 permitted operations were assessed as band D (1 from Anglian Water, 2 from Severn Trent Water and 1 from Southern Water), compared to 1 band D and 1 band E operation in 2019
• there were 11 incidents (1 minor impact to land, 9 minor impact to air and 1 significant impact to air), the same as in 2019
• 7 of the 11 incidents, including the one with significant impact to air, were related to odour from one Southern Water site

7. Sludge disposal and use

For 2020 we carried out another assessment of water company sewage sludge disposal and use. We reviewed data to check compliance with the relevant regulations (SUiAR and EPR) and the water industry voluntary Safe Sludge Matrix. 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 2021). Our strategy for safe and sustainable sludge use (published on GOV.UK in March 2020) explains our intention to move sludge regulation from the SUiAR to the EPR in 2023.

For 2020, we continued to suspend the EPA sludge disposal and use metric whilst we complete and review our compliance assessment approach. We continue to assess water company sludge disposal and use and are enabling innovation to achieve good environmental outcomes. We are developing a revised EPA metric, working with the water companies, for assessing sludge disposal and use in the future.

8. 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 Water Industry National Environment Programme (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. For the financial year ending March 2021:

• only 98.2% of planned schemes (377 out of 384) were completed within their deadlines
• 3 companies (Severn Trent Water, Southern Water and Thames Water) failed to complete 100% of their planned schemes
• Southern Water were significantly below target (red) due to 5 schemes not being completed on time
• 6 companies reported 100% completion of planned schemes within their deadlines

Across the sector there are about 15,000 storm overflows operated by water companies. Since 2013 we have required the water companies to introduce Event Duration Monitoring (EDM) on the majority of them (to monitor how often and for how long they are used). Each water company was funded through their WINEP to install EDM, however this does not form part of the EPA WINEP delivery metric. By the end of 2020 water companies were reporting on more than 12,000 storm overflows. The requirement has now been extended to monitor all storm overflows by December 2023. We have published the EDM dataset from the water companies describing how often and for how long the monitored storm overflows operated during 2020. All water companies have also published their EDM data returns and supporting commentaries.

9. Security of water supply

The EPA Security of Supply Index (SoSI) metric compares forecast water available for supply with actual customer demand.

For the period April 2020 to March 2021:

• 7 of the 9 water companies reported a score of 100 and green status in the EPA
• Anglian Water and South West Water failed to achieve a score of 100 and were rated below target (amber)

10. Water resources planning

10.1 Restoring sustainable abstraction (RSA)

Between April 2008 and March 2021, we have been investigating and changing permanent abstraction licences that cause environmental damage, reduced biodiversity and reduced ecosystem resilience. By the end of March 2021 the RSA programme had:

• completed 139 water company licence changes which included 4 between April 2020 and March 2021
• prevented water companies from abstracting over 20 million cubic metres of water from sensitive and fragile habitats each year
• removed the risks posed by abstraction for at least a further 141 million cubic metres of water each year (by removing unused quantities from water company abstraction licences)

Through the RSA programme we have taken action to protect chalk aquifers and streams. Since 2008, we have:

• prevented water companies from abstracting 13 million cubic metres of water from chalk aquifers and streams each year
• removed the risks posed by abstraction of another 62 million cubic metres of water each year from chalk aquifers and streams (by removing unused quantities from water company abstraction licences)

10.2 Water resources management plans

All water companies report annually on progress with implementing their WRMPs. We review these and report our findings to Defra (Department for Environment, Food and Rural Affairs). Our previous report provided information for April 2019 to March 2020. We will publish information for April 2020 to March 2021 in our next report.

The health of assets (including WTW, reservoirs and pipelines) is becoming an issue for some companies. The Drinking Water Inspectorate has issued a notice to Southern Water prohibiting supply from one water treatment works until problems associated with the treatment assets are resolved. Where we have seen other companies having issues with asset health we have shared information with Ofwat.

Since March 2020 there has been a change in water demands across the country. We have seen non-household demands dropping but an increase in household demands. We expect all companies to continue to monitor and assess the impacts of COVID-19 on their demands, with more people working at home. They will need to assess what the normal demand will be in future.

11. Flood and coastal erosion risk management (FCERM)

Between April 2020 and March 2021, water companies invested:

• £82 million to reduce the risk of sewer flooding to properties
• £321 million to maintain the public sewer system to prevent blockages and flooding
• £6million in property-level protection and mitigation measures to reduce the likelihood of customers’ homes experiencing sewer flooding

Under the Flood and Water Management Act 2010, water companies are risk management authorities (RMAs). This means they have to act in a way consistent with the new National FCERM Strategy for England (adopted on 25 September 2020). They have a duty to cooperate with other RMAs. Between April 2020 and March 2021 water companies have:

• developed their drainage and wastewater management plans (DWMPs), publishing the BRAVA (Baseline Risk and Vulnerability Assessment) phase of the plans
• completed year 1 of their price review 2019 business plans
• 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 incidents over a challenging winter period
• continued to innovate and share good practice

There have been good examples of partnership working this year, including:

• Thames Water – pilot study working with London Boroughs of Camden, Enfield and Hillingdon providing innovative monitoring and Sustainable Drainage Systems (SuDS)
• United Utilities on the Thornton Flood Risk Resilience project – in collaboration with Wyre Rivers Trust, Environment Agency and other partners as part of the EU LIFE Natural Course Project providing wetlands and flood storage
• Wessex Water on the resilience to cope with climate change in urban areas (RESCCUE) project – working with Bristol City council to assess the impacts that climate change and sea level rise will have on the city and develop a resilience action plan

There are still areas for improvement to strengthen collaboration. Over the next year the focus will be on the improved sharing of data and a stronger engagement focus. This will help facilitate better integrated completion of outcomes across the whole RMA community.

The National FCERM strategy for England provides the framework for RMAs, including water companies, to improve the nation’s resilience to flood risk and coastal change. We published a National FCERM strategy for England Action Plan in May 2021. It describes how we will work with Ofwat and Water UK to progress the strategy over the next year. The action plan will be updated annually.

Water companies are responsible for the safety of their reservoirs. Following the partial spillway failure incident at the Toddbrook reservoir (Whaley Bridge) in August 2019, government commissioned an independent review of reservoir safety. The Independent reservoir safety report was published in May 2021. Government has also issued a legal direction. This requires all operators and owners of large raised reservoirs, including water companies, to prepare on-site emergency flood plans for their reservoirs. We will continue to work with water companies and the wider reservoir sector to complete the review recommendations. We will support them in maintaining high standards of reservoir safety.

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 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.

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). Sentencing is a matter for the courts who fine on a case-by-case basis, and for this reason fines vary. 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. In 2020 COVID-19 delayed progress with some investigations and caused court adjournments and delays in the listing of our cases.

In 2020:

• we completed 3 prosecutions against 2 of the water companies which resulted in total fines of £852,000 being imposed
• prosecution fines ranged from £8,000 to £800,000
• we accepted 14 EU offers from 6 of the water companies totalling £2,465,901, ranging from £15,000 to £306,509, and we rejected 11 EU offers

By the end of 2020 we had 10 further prosecutions in court.

Enforcement and sanctions for the 9 water and sewerage companies 2015 to 2020

Year	Number of prosecutions¹	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	11²	£21,589,334	15	£1,435,900
2018	5	£2,227,000	15	£3,432,150
2019	4	£1,297,000	11	£2,429,760
2020	3³	£852,000	14	£2,465,901

¹ Cases against a company sentenced in court on the same day count as one prosecution.

² One prosecution in 2017 includes the 6 separate cases which made up the super-case against Thames Water Utilities Limited with total fines of £19,750,000.

³ One prosecution in 2020 includes 2 separate cases against Anglian Water Services Limited sentenced in court on the same day which is counted as one prosecution.

12.2 Improving water company performance

There have been some individual company and sector performance improvements in 2020. However during the last 5 years the sector has been unable to consistently meet the targets we have set. All companies need to take responsibility to tackle specific performance issues. We also want the sector to work more collaboratively and achieve improvement at a greater pace. Increased sharing of best practice and ambition will help to enable the sustained improvements that are required to protect and improve the environment.

Last year we set out a number of actions. Since then we have:

• made sure all companies publish a pollution incident reduction plan (PIRP) for them to better understand their risks and implement interventions to reduce incident numbers – we will continue to track progress to make sure action is timely and effective
• written to and engaged with water companies at Chair and Executive Director level to set out the challenge and push for individual company and sector improvements
• worked with Ofwat to better align the financial penalties that they impose with our environmental performance metrics
• continued to use our enforcement and sanctions on water companies that failed to uphold the law or caused serious environmental harm
• worked with Defra to develop new duties for managing storm overflows to be added by government amendment to the Environment Bill – this will require government to publish a plan to reduce storm overflow discharges and report progress to Parliament, and water companies must publish data annually
• been a key member of the national Storm Overflow Taskforce to set a long term goal to eliminate harm from storm overflows
• worked with Defra to develop statutory duties (in the new Environment Bill) for water companies to produce DWMPs – to understand and target improvements in network capacity that will reduce both surface water flooding and pollution while enabling growth and development

As the environmental regulator we are prioritising and focusing our resources where they will have the greatest influence on water company performance. We will:

• assess storm overflow EDM data – it is a significant step forward that the majority of storm overflows are now being monitored, enabling improved understanding of their operation
• focus our regulation to make sure water companies get to the root cause of non-compliance and pollution incidents
• apply even greater scrutiny to companies that have been consistently poor performers

We recognise that where significant investment is required, improvements cannot happen overnight. But we will continue to use our influence and regulatory powers to require water companies to make timely, necessary and achievable improvements.

12.3 Best practice and innovation

As a modern regulator, we use an ‘earned recognition’ approach. This encourages and recognises better performance for those companies who comply with regulation and consistently perform well. We work with these companies to promote best practice and innovation. We also use influence, advice and other complementary approaches to achieve more environmental outcomes whilst reducing the regulatory burden on the best water companies.

There have been good examples of best practice and innovation in 2020 including:

• Northumbrian Water’s ‘Bin the Wipe’ campaign has reduced the number of wipes found in sewers by influencing customer behaviour – flushing of wipes down toilets can cause sewer blockages, leading to pollution incidents to the environment and flooding to customer homes
• Severn Trent Water is running large scale trials – including a project part funded by the EU Horizon 2020 NextGen programme, to lower waste water treatment temperatures to reduce costs and carbon footprint
• United Utilities has continued to promote nature-based solutions to increase uptake of constructed wetlands and support development of wetland technology to treat storm discharges
• Wessex Water engaged suppliers in an ‘intelligent sewers challenge’ to propose innovative ways to manage data and alarms raised by in-sewer monitoring equipment – following trials, a preferred product has been selected that combines sewer and rainfall data to predict flows, identify blockages and prevent sewer flooding and pollution
• Yorkshire Water, the University of Sheffield and Siemens Digital Industries have used artificial intelligence to resolve network problems quickly – in trials this has identified sewer blockages before they escalate and cause pollution

13. Conclusions

For 2020 we are pleased to report that 5 companies have achieved the industry leading EPA rating (4 stars). Furthermore, Severn Trent Water, United Utilities and Wessex Water have sustained strong performance, achieving industry leading status (4 stars) at least 3 times in the last 5 years. We were clear what was required and these companies have shown it is possible to meet the environmental targets that are set.

Although we have seen some aspects of performance improve, this is not the case for all companies and reflects badly on the sector. Additionally, no company achieved all the expectations that we set out for the period 2015 to 2020, which is very disappointing. Performance is not good enough and there are opportunities for even the best performing companies to further improve. We expect all companies to make improving performance a priority and promote best practice.

We remain concerned that 2 companies are still significantly under performing in several areas. In 2020 Southern Water and South West Water performed the worst and both require improvement (2 stars).

We are disappointed that the performance of other water companies has been erratic, and we are not seeing stability or progression in star ratings. We expect to see more ambition from them to move to and maintain leading status (4 stars). All water companies will need to rise to this challenge quickly.