Households throughout the North East could see £20m taken off their water bills after the regions water supplier was hit by a huge fine.

Northumbrian Water has been ordered to repay the money for missing targets in areas such as water supply interruptions, pollution incidents and internal sewer flooding.

The fine is thought to be linked to widespread power outages during Storm Arwen in November 2021 when extreme weather conditions in the region caused significant problems for households. 

The water supplier is one of 11 to have been fined by regulator Ofwat. It has been ordered to repay a total of £20.3m. 

However, it noted that all the water companies will be permitted to increase charges in line with inflation, using the consumer prices index including owner occupiers’ housing costs (CPIH) – which hit 8.6% in the 12 months to August.

This means that some reductions could be offset by inflation-linked price rises in customers’ bills.

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Elsewhere in England, Thames Water and Southern Water performed the worst and will have to return almost £80 million to customers, Ofwat said.

But other companies which exceeded their targets will be able to recover more money from customers, meaning they could see their bills go up.

David Black, the chief executive of Ofwat for England and Wales, said: “When it comes to delivering for their customers, too many water companies are falling short, and we are requiring them to return around £150 million to their customers.

“We expect companies to improve their performance every year; where they fail to do so, we will hold them to account.

Ofwat’s review comes amid greater scrutiny of water companies during a period of drought and with some areas of the country facing hosepipe bans during the summer heatwaves.

Customers should see their bills reduced in 2023 to 2024.

In response to the Ofwat ruling, Northumbrian Water's regulation and assurance director Andrew Beaver said: “Our levels of customer service and environmental impact are among the best in the industry. This is demonstrated by the four star rating the Environment Agency gave us earlier this year.

“Ofwat’s draft decision however, proposes a significant financial penalty. This is almost entirely driven by what happened during Storm Arwen in late 2021, when extreme weather conditions in our operating areas led to widespread power outages. Despite the large scale multi-agency response some customers experienced temporary interruptions to their water supply.

“We expected that Storm Arwen would have been deemed an extreme weather event and not included in their draft determination, however Ofwat has rejected this proposal in its draft decision.

“We are very surprised by Ofwat’s draft decision and will be responding to the consultation in due course. We will keep customers informed of the outcome.”

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