Campaign update: Our legal action against Ofwat

We took Ofwat to court to protect customers from paying twice and our rivers from sewage pollution

This week, the High Court finished hearing our legal challenge of Ofwat’s approach to its ‘not paying twice’ policy in its latest price review (PR24). The hearing took place over three days on 4, 5 and 17 November.

River Action, working with Leigh Day and expert barristers David Wolfe KC and Nicholas Ostrowski, brought this case to address our serious concerns about Ofwat’s approach. We argued that Ofwat’s current methods could allow water companies to charge billpayers again for environmental improvement works that they have already paid for, despite its promise that customers should not pay twice. We challenged Ofwat’s failure to require water companies to demonstrate compliance with environmental regulations as part of its price control exercise, as it said it would. We also highlighted flaws and gaps in Ofwat’s “clawback” mechanism, intended to prevent double funding when water companies fail to meet their environmental obligations.

Ofwat defended its approach, arguing that it never intended to look at actual compliance by water companies as part of its price-setting process and said that this was a reasonable approach to take given its regulatory function.  Ofwat said that its clawback mechanism did not need to be explained in PR24 and that it intended to develop a more detailed framework.

During the hearing, the court considered detailed evidence on Ofwat’s PR24 process and methodologies, including exchanges between campaigner Matt Staniek of Save Windermere and Ofwat’s CEO. The court also looked at Windrush Against Sewage Pollution’s evidence of illegal sewage discharges into Lake Windermere by United Utilities, the case study at the heart of the claim.

We think that this case has uncovered significant issues with Ofwat’s regulatory approach to its ‘not paying twice’ policy, with internal documents released in response to the claim revealing gaps in Ofwat’s understanding and enforcement of water company compliance with environmental law. As well as Ofwat’s approach likely allowing some form of double funding, these shortcomings are contributing to the ongoing sewage pollution crisis.

Due to the complexity of the issues, a judgment is not expected for several weeks. We will provide a further update as soon as the judgment is handed down.

Regardless of the legal outcome, we will continue to push for regulatory reform to ensure that billpayers do not pay twice for urgently needed infrastructure improvements and that water companies are properly held to account to stop sewage polluting our rivers.