Slippage in overall performance of the nine major water and sewage companies in 2018 coincided with an unacceptable increase in serious pollution incidents, according to the latest Environment Agency annual report on performance ratings.
The report, released on 10 July, points out this was the first time since the ratings system was introduced in 2011 through the Environmental Performance Assessment (EPA) that there has been a reversal in the trend of gradual improvement in the sector.
In 2018, it finds that "there was a drop in performance with 3 companies rated as 2 star (requiring improvement) and only one company [Northumbrian Water] achieving the highest 4-star rating (industry leading company) under the EPA", the latter a performance that should be applauded, made possible only with dedication from the top down within the organisation, it said.
Severn Trent Water, United Utilities and Wessex Water fell from 4 stars to 3 stars – meaning they must improve to reduce environmental impact - while Anglian Water and Thames Water remained on 3 stars.
Meanwhile, Southern Water, South West Water and Yorkshire Water only managed 2 stars, meaning they demonstrated an "unacceptable level of performance". EA says South West Water’ "has consistently demonstrated unacceptable performance and a red rating for pollution incidents". Most water companies are also likely to fail to meet 2020 pollution targets, it added.
Southern Water and Thames Water also failed to demonstrate their Water Resources Management Plans (WRMP) were robust enough to maintain security of water supply, says the report.
On sludge performance, the report found there was a need to review practices and regulations in order to ensure better environmental outcomes.
As to compliance with numeric permit conditions at Sewage Treatment Works and Water Treatment Works, the report concluded this remained good (98.6%), though further improvement needs to occur, particularly in water treatment plants.
Delivery of planned environmental improvements against Asset Management Plans was good (99.8%).
In view of the poor overall results, EA chair Emma Howard Boyd repeated a previous warning that water companies are now likely to face a tougher regulatory approach involving increased inspections. She pledged that the EA will continue working with Ofwat to investigate stiffer financial penalties that would drive better environmental performance as fines are currently a minimal proportion of turnover.
The report says it is aiming to help water companies drive the necessary improvements by setting up the ‘Improving Water Company Performance’ programme, discussing with Ofwat closer cooperation on both financial penalties and incentives linked to environmental performance, and "seeking to recognise and promote good performance". But it also stresses "there will be consequences where poor performing companies do not achieve expectations".
It says the EA is to continue to use the EPA metrics to highlight areas needing improvement, adding: "We want companies to focus on the targets we have set, not only where performance has deteriorated but where it has begun to plateau."
Introducing the report, Boyd said: "This report is about 2018, but I am sad to say we are not seeing dramatic improvements in 2019. As a result we will toughen our regulatory approach."
She added: "We will increase our inspections and auditing of companies’ performance. We will launch a new programme called 'Improving Water Company Performance'. This will focus on the poor performing companies and on tackling the behaviour which is doing most damage to the environment. This includes failure to prevent serious pollution incidents, noncompliance with permits and the wrong use of sludge."
Commenting on the results, executive director of operations Dr Toby Willison said: "Water companies need to clean up their act. People expect water companies to improve the environment, not pollute rivers and ensure secure supplies of water. With only one exception, none of the companies are performing at the level we wish to see, the country expects and the environment needs. We will continue to challenge CEOs to improve company performance and we will take strong and appropriate enforcement action."
He added that "companies performing well have a positive ripple effect on the natural environment and communities in their regions" and that "we want all water companies to meet the expectation of their customers, the needs of environment and learn from the best practice that the leading company is demonstrating".