River Action starts legal action over customers ‘paying twice’

Following its ‘letter before action,’ campaigner River Action has now filed a legal challenge against Ofwat, arguing that customers could pay twice under its PR24 arrangements.

The action specifically concerns the PR24 final determination for United Utilities, relating to the funding allocated for wastewater treatment works and pumping stations in and around Lake Windermere.

River Action has claimed Ofwat unlawfully approved enhancement funding from customers without a mechanism to ensure the money will be used solely to improve sewerage services, rather than to bring services into compliance when that should have already happened under past schemes. As a result, customers could pay twice: “First through water bills that should have covered infrastructure maintenance, and again through new hikes aimed at fixing the same problems”.

Moreover in the challenge, which was filed with support of law firm, Leigh Day, River Action said Ofwat relied on hydraulic simulation modelling rather than real-world pollution data, which failed to reflect the true environmental damage and ignored key evidence of widespread sewage discharges when assessing funding needs.

Emma Dearnerly, head of legal and policy at River Action, said the case “highlights systemic issues with Ofwat’s approach… This is why we’re demanding immediate reform to ensure regulators do their job and water companies are not let off the hook. The cost of fixing our crumbling water infrastructure should fall on these companies and their investors – not the British public.”

"We agree that customers should not pay twice for companies to regain compliance with environmental permits, and have included appropriate safeguards in our PR24 determinations to ensure this which we will monitor closely, taking action if required. We will respond to their claim in due course."

The campaigner wants Ofwat to reassess its PR24 determination for United Utilities in relation to Windermere, and more widely for Ofwat to reassess other water company schemes wherever there are concerns that customers are “unfairly covering the cost of past failures”.

While the action is specific to United Utilities, River Action pointed out that it believes the issue extends far beyond. “Under PR24, Ofwat has likely permitted other firms to operate in a similar way— leaving bill-payers to pick up the tab for failings that should have been fixed with previous funding.”

An Ofwat spokesperson said: "We reject River Action's claims. The PR24 process carefully scrutinised business plans to ensure that customers were getting fair value and investment was justified."