Water providers could owe £800m in compensation to bill payers for ‘unfairly overcharging customers’
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Thousands of bill payers in the UK could be owed millions of pounds in compensation as six water firms are under fire for allegedly ‘underreporting pollution incidents’ and “unfairly overcharging” customers. It is thought that Severn Trent Water, Thames Water, United Utilities, Anglian Water, Yorkshire Water and Northumbrian Water could end up paying out £800m in compensation to more than 20 million customers if the legal cases are successful.
Environment and water consultant, Professor Carolyn Robert of Leigh Day Solicitors is leading the case after alleging the water companies have broken competition laws by misleading the Environment Agency and the regulator Ofwat.
Water companies are required to report such incidents as part of their legal duties and responsibilities, but Leigh Day says it appears many pollution incidents have gone, and continue to go, unreported.
The number of pollution incidents a company reports to their regulators is an important factor in determining the price water companies can ultimately charge for their services. Meanwhile, Professor Roberts argues that, if the water companies had correctly reported the number of pollution incidents, performance penalties would have been applied and this would have reduced how much customers were charged.
Professor Roberts told BBC Radio 4’s Today programme: “Our claim is that water companies are underreporting the number of times that they allow… partly treated or untreated sewage to overflow into our rivers and on to our beaches, and the agreements they have with the regulators – Ofwat and the Environment Agency – allow them to charge their customers more if they are meeting their targets. We don’t think they are meeting their targets.”
Responding to a statement by Severn Trent Water that the claim is “highly speculative” with “no merit”, however, the professor said: “We are pretty certain that what we are saying is in fact true.”
The first claim, brought on behalf of eight million people against Severn Trent Water, is estimated to be worth more than £330m. LeighDay said it is the first environmental collective action case of its kind.
Commenting on the lawsuits, Ms Roberts said: “Like many others across the country, I have viewed with horror the escalating number of stories in the media regarding the volume of sewage discharged into our waterways and on to our beaches.
“The population of the UK has a right to expect that our rivers, lakes and seas will generally be clean, except under exceptional circumstances.”
Leigh Day says anyone who has paid a water bill to one or more of these companies from April 2020 – or April 2017 for Severn Trent Water customers – could be entitled to compensation if the claims are successful. Leigh Day is seeking money for customers on an opt-out basis, meaning people only have to come forward to claim their compensation if the case is successful.
It is bringing Severn Trent Water to the Competition Appeal Tribunal and will issue five further claims against the other water companies over the coming months.
If successful, solicitors expect any compensation to be paid by the relevant water company and its shareholders, not by raising customer bills.
Zoe Mernick-Levene, partner at Leigh Day, said: “These claims are hugely significant. Not only is compensation being sought for millions of customers who have and continue to pay higher water bills, but we hope that it will also send a message to water companies that they cannot unlawfully pollute waterways and mislead their regulators without consequence.”