New Era for UK Water Sector: Government Introduces Compensation for Boil Notices and Empowers Customers with Reformative Panels

Environment Secretary reveals new regulations for water companies, including compensation for boil notices

The Environment Secretary has announced four new reforms, one of which will allow customers in the UK to have unprecedented authority to challenge water companies via "customer panels" for the first time.

Business correspondent @taaffems

Wednesday, July 10, 2024, 11:

The government has introduced initial measures including increased compensation, potential refunds, and the establishment of customer panels in response to what it calls the crisis in the water industry.

Environment Secretary Steve Reed announced plans to hold a meeting with water company executives to address issues related to customer service and persistent sewage discharges, reinforcing points previously reported by Sky News.

Four policy change declarations

A set of reform proposals will be introduced to the gathered companies:

• Water providers will be required to issue higher payments more frequently. Payments will also be made under a broader range of situations including during boil water advisories. Discussions on increasing compensation following service disruptions will occur, with Mr. Reed advocating for a significant rise in payout amounts.

• In an unprecedented move, UK customers will now have the ability to form "customer panels" that can call upon company directors and hold utility leaders responsible.

• Businesses are anticipated to modify their governing documents — specifically their articles of association — to prioritize customers and environmental concerns as their main focus.

• Mr. Reed has urged the water authority Ofwat to earmark funds specifically for infrastructure improvements to benefit consumers and the environment. He stated that any unspent funds should be returned to customers, emphasizing that this money should not be used for bonuses, shareholder dividends, or raises in salaries.

Mr. Reed is set to inform leaders in the industry that he intends to collaborate with the sector and its financiers, including the largest pension fund in the UK, to draw in additional investments, halt environmental pollution, and generate employment opportunities.

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What's the problem?

Despite efforts by businesses to curtail contamination, ongoing sewage discharges in the sector have tainted rivers and streams across the UK, impacting popular swimming spots, leading to illness, and resulting in fish deaths.

Last summer, the UK government was preparing for the possibility of Thames Water, the country's biggest water supplier, going under due to financial troubles. Thames Water announced on Tuesday that it would deplete its financial reserves by May 2025 without securing additional funding.

South East Water, serving about 2.3 million customers, announced on Wednesday that it requires additional funding from investors to remain operational due to a shortage of cash.

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What comes now?

On Thursday, Ofwat is set to release its evaluation of the water sector's proposed financial and investment strategies.

Officials are anticipated to present additional plans for overhauling the industry.

Mr. Reed emphasized that the egregious destruction was intolerable and measures must be taken to ensure it does not recur.

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The manifesto from the Labour Party declared that it would implement special measures, a type of government oversight, for underperforming water companies to facilitate the purification of the nation's seas, lakes, and rivers.

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