Six water companies could face paying out millions of pounds over claims they underreported discharge into rivers and the sea and overcharged their customers as “privatised monopolies”.
A collective legal case against the companies claims they failed to properly report sewage spills and pollution of rivers and seas to both the Environment Agency and Ofwat, the water regulator for England and Wales. The first of six parralel claims is against Thames Water.
The company has eight million customers, largely across the South East. Claims against Thames Water, United Utilities, Anglian Water, Yorkshire Water and Northumbrian Water are being brought in the coming months, reports the Guardian.
The legal claim says the water companies have breached competition law. It says this was done by failing to report discharges which would have affected the price they can charge to customers.
The number of pollution incidents reported by a company, and any subsequent breaches of permits attached to water treatment plants to control raw sewage releases, are factors used when determining how much water companies can charge. The claim alleges underreporting means water companies have been overcharging.
Professor Carolyn Roberts, an environmental and water consultant represented by the law firm Leigh Day, is bringing claims at a competition tribunal on behalf of more than 20 million homes that are customers of the six firms.
The claim says customers were overcharged because the companies abused their positions as “monopolies”. It also alleges they failed to fully report the scale of raw discharges into rivers and seas, meaning they avoided penalties that could have impacted costs to the consumer.
Roberts says this means customers have been overcharged by hundreds of millions of pounds. Roberts, emeritus professor of environment at Gresham College, said she had been researching rivers since the 1970s. She said: “The last two decades have been catastrophic for rivers and I want something done about it.
“The population of the UK has a right to expect that our rivers, lakes and seas will generally be clean, except under exceptional circumstances. It appears that because of the serial and serious underreporting at the heart of these claims, water companies have been avoiding being penalised by Ofwat. I believe this has resulted in consumers being unfairly overcharged for sewage services.
“Millions of consumers have been paying their water bills on the basis that water companies are meeting their targets, but instead every year water companies let raw or only partially treated sewage into the environment in breach of the rules.”
If Roberts’ claim is successful, anyone who has paid a water bill to one or more of these water companies from April 2020 may be entitled to compensation. The value of the claim against Severn Trent Water is estimated at more than £330m and if successful, the six claims could lead to compensation payments of more than £800m.
The compensation is being brought in an opt-out collective proceeding. This means that individuals do not need to sign up to the claim. Instead, customers who have suffered loss are included unless they specifically choose not to be. Customers will only have to come forward at the compensation stage if the claims are successful.
Zoë Mernick-Levene, partner at law firm 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 sends a message to water companies that they cannot unlawfully pollute waterways and mislead their regulators without consequence.
“Customers put their trust in water companies, believing that they are correctly reporting these spillages and appropriately treating the sewage so it can safely be returned to the environment. Instead, our client believes they are misleading their regulators and customers are overpaying while England’s waterways are suffering as a result.
“As well as providing individual compensation and justice, opt-out proceedings such as these claims act as a deterrent to future misconduct. Consumers can act together to hold businesses to account for any rule breaking.”
The claims come as six water companies are under investigation for what regulators called “shocking” failures in the way the majority of water companies run their waste treatment works. The investigation will focus on raw sewage discharges.
What do the water companies say?
Severn Trent said it strongly refuted the claim. “This is a highly speculative claim with no merit which we strongly refute. Should pollutions ever occur, they are always reported to the Environment Agency. Any claim to the contrary is wholly and completely wrong.
“Our regulators, the Environment Agency and Ofwat, set strict targets and performance measures that deliver for our customers and the environment. Severn Trent is recognised as a sector leader by both regulators across operational and environmental measures. We consistently deliver for our customers, and recently received the highest 4* status for environmental performance from the Environment Agency for the fourth year running.”
Yorkshire Water said: “We are aware of an alleged claim being pursued by Leigh Day solicitors. Given the nature of the proposed proceedings, it would be inappropriate for us to comment any further.”
A Thames Water spokesperson said: “TWUL is aware of a claim threatened by Prof Carolyn Roberts. TWUL has engaged cooperatively with Prof Roberts to explain that the threatened claim is without merit. No claim has yet been issued against Thames.”
A spokesperson for Water UK, the industry body, said: “This highly speculative claim is entirely without merit. The regulator has confirmed that over 99% of sewage works comply with their legal requirements. If companies fail to deliver on their commitments, then customer bills are already adjusted accordingly.”
The Guardian says Northumbria Water did not respond to requests for comment, while United Utilities and Anglian Water pointed towards the Water UK comment.
