Water Companies Exposed via Latest Environmental Ratings

The Environment agency AND Ofwat have both published reports today which spotlight the systemic failures of the water sector. The Environment Agency (EA) released their report (which has been very delayed) focused on environmental performance and asset health and Ofwat launched theirs on on asset health and financial management, with a large focus on the last 5 year period (PR19 period).

And the reports are damming (but somewhat unsurprising).

We all know that the stench of the sewage scandal has become a fixture of the mainstream news in the last few years. We have also seen water companies making promise after promise to deliver record investments and environmental targets. But, in an industry as broken as this one, you learn not to trust companies to deliver on their promises.

And today, we have sadly been proved right yet again, with real evidence of the sheer scale of the industries failure to deliver, time and time again.

Our Topline From Both Reports

All but one water company has a 2* environmental performance rating or below in the EA report – Thames Water has 1*

Customer satisfaction with water companies at lowest since they began measuring this in 2020-21.

In the Ofwat report, its been revealed that almost all water companies have overspent their total water and wastewater allowances over the 2020-25 period, yet pollution incidents increased in 2024.

Both reports show severe, long-term failures in the privatised water sector

Customer satisfaction with water companies at lowest since they began measuring this in 2020-21.

The sector as a whole has significantly overspent on wholesale water and wastewater costs – higher costs of meeting improvement targets is cited as a key factor in this – which raises the question, if the sector as a whole are apparently overspending to improve their services, but still mostly getting 1-2 stars in the EPA ratings, then clearly there is something fundamentally broken in the industry that is trickling down through every layer of management. It means not only is public and environmental health not being prioritised overall, even the money that is making through to improve performance in those areas is largely not improving things either.

And to top it all off, as these reports landed today, there were over 160 sewage alerts on the SSRS. The public and our rivers and seas are the one paying the price whilst those in power sit back and continue to let it all unfold.

Industry Leaders?

SAS did an analysis of water company plans in our Water Quality Report which was published in spring 2025. In our report, we analysed initial assessments of PR19 / PR24 plans for the next 5 year period alongside FOI’ed data. Back in the PR19 documents, Ofwat identified three companies that stood out: South West Water, Severn Trent and United Utilities. According to the regulator, this trio offered ambitious plans that set a new standard for the water sector. So, it awarded them fast-track status as well as financial benefits and apparently bragging rights. These reports today help us to fill in some missing gaps of our analysis and confirms one or two things, especially for two of them who have continued to under- perform.

South West Water

South West Water promised to deliver on its proposed sector-leading outcomes and received a financial reward for doing so. Some of the examples being, improving its environmental ratings and reducing pollution incidents.

Yet what both reports highlighted today, is systemic failures across the board.South West Water once again failed to deliver on its environmental targets.

They may talk a big game about clean rivers and green goals—but the reality is a tide of broken promises and raw sewage.

United Utilities

United Utilities (UU) received a substantial £24 million for its PR19 plans, which included a comprehensive five-year roadmap and a sector-leading proposal to make bills more affordable while providing support for vulnerable customers. The company has come close to meeting its PR19 targets for reducing discharge numbers, but, unfortunately, it is still moving in the wrong direction when it comes to pollution incidents.

United Utilities (UU) was long seen as the only “industry leader” consistently on track—until 2023, when the number of pollution incidents surged by 71%. UU attributed this spike to an exceptionally wet year and increased monitoring. Yet the downward trend shows no sign of stopping. The report reveals that pollution incidents rose to 376 in 2024, which is 45 per 10,000 km of pipe—well over double the company’s target of 19.5.

Severn Trent

Despite being one of the better performing water companies, this really isn’t saying much. Yes it has maintained a 4* rating, but does this really give them bragging rights when they operate within an industry as broken as this one. Ofwat and the EA are acting as though its the golden child, a company to actually be proud of.

Conclusion

And the rest of the water companies? They are doing a 5* job at showing severe, long-term failures in the privatised water sector. Especially Thames Water, the current poster child of the broken water industry who are standing head and shoulders above the rest of the failing companies for receiving just 1* in their EPA. And yet, investors and debtholders are demanding that the government let the company ignore environmental regulations up to 2040 in exchange for their investment and debt cancellation. This is madness.

How can the government honestly claim that any of these 9 water companies are meeting their statutory obligations after the results released today? Both of these reports are a stark reminder of the dire state of the industry which needs to see transformational reform and nothing less. SAS are urging the Government to take action and stop using hollow policies like ‘automatic fines’ to pull the wool over the public’s eyes. The Government should be using Special Administration for all water companies moving forward, because this is not an industry that can be fixed with tinkering around the edges.