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River Action Taking Ofwat To Court Over Water Bill Hikes
In March this year, campaign group River Action announced that it would be filing a legal claim against water industry regulator Ofwat, accusing it of unlawfully making customers pay for infrastructure repairs and water mismanagement that should have been dealt with years ago.
And it has just been announced that permission has been granted for the legal challenge to proceed, with a full court hearing now in the offing to call into question the approach adopted by the regulator when it set the prices that water companies are able to charge customers.
What does the legal challenge entail?
River Action’s claim focuses on Ofwat’s 2024 Price Review (PR24), which approved above-inflation increases in water bills, including an average annual hike of £123 per household… all without guaranteeing that the funds would be spent on new infrastructure.
The challenge was launched following investigations by Windrush Against Sewage Pollution and founder Matt Staniek, which revealed chronic sewage pollution in Lake Windermere and the surrounding area, as well as regulatory failings relating to PR24.
The claim itself focuses on the PR24 review for United Utilities, which is responsible for the Lake Windermere catchment area, but River Action believes that this particular case exposes fundamental failures in Ofwat’s way of working, with national implications.
It is hoped that this legal action will drive Ofwat to reassess its PR24 determination for United Utilities, as well as encouraging the organisation to review other supplier schemes where concerns arise that customers are having to unfairly cover the cost of past failures.
Lake Windermere pollution scandal
The Save Windermere campaign discovered that 6,000 hours of raw sewage was discharged into the lake in 2024… and this new legal challenge claims that Ofwat made it permissible for United Utilities to divert funds intended to support future projects to address past failures, instead of investing in improvements to pumping stations and wastewater treatment sites.
In March, Mr Staniek said: “United Utilities’ current investment isn’t good enough. They have illegally dumped sewage into Windermere and are merely tinkering at the edges with short-term fixes that only offer slight improvements. This is not acceptable.”
Algal blooms, in particular, have been problematic for the lake, caused by excessive nutrient pollution, with sources including sewage treatment works, leaking septic tanks and agriculture.
Since 2020, United Utilities has invested £45 million in infrastructure around Windermere, reducing phosphorous levels by a third. It also intends to invest £190 million in the area over the next five years, including building more storm tanks so that raw sewage is stored during periods of heavy rainfall so it can be treated later, rather than being spilt from outfalls.
Legal action
The forthcoming court case comes amid ongoing calls for an overhaul of the regulatory system, with further scrutiny coming from the Independent Water Commission, headed up by Sir John Cunliffe, which will look into whether Ofwat is still fit for purpose.
River Action is now calling for regulatory reform and for Ofwat to prevent water companies from passing on the costs of failures to customers.
Currently, billpayers are being charged twice, first with water bills that should have been used to cover infrastructure maintenance and then again via bill hikes that will go towards fixing the same problems.
For example, in August last year United Utilities was granted enhanced funding to carry out sewage treatment upgrades around Windermere, despite the evidence showing more than 6,000 hours of raw sewage discharge in 2024.
This was seemingly ignored by Ofwat, which ruled in favour of hydraulic simulation modelling – which doesn’t reflect on-the-ground conditions.
Law firm Leigh Day will be taking the case to court, arguing that:
– Ofwat’s approach to its ‘not paying twice’ policy was unlawful because it didn’t take reality into account, instead relying on theoretical hydraulic simulation modelling
– Ofwat lacks meaningful clawback mechanises if suppliers misuse funds
– Ofwat has failed to carry out legally sufficient investigations into whether its approach is adequate
Emma Dearnaley, head of legal with River Action, said: “We are delighted the High Court has said we can take our case to court. This is about the British public not paying twice for the consequences of water companies failing to invest in infrastructure.
“That is quite obviously fair and right, yet Ofwat’s approach gives rise to serious concerns that its promise has not yet been kept.
“ It also raises important and timely questions about whether Ofwat is fit for purpose, something the Independent Water Commission is scrutinising too. We must have robust regulators who are up to the task of holding water companies to account.”
Naturally, this story will be ongoing over the next few weeks and months, so we’ll keep our eye on it and report back with any fresh updates. So watch this space!