Thames incurs £16.7m penalty for poor customer satisfaction

Thames Water will hand back almost £16.7 million to customers after receiving the lowest score in Ofwat’s annual ranking of customer satisfaction with water companies.

Portsmouth topped the leaderboard for 2020/21 followed by Wessex and Northumbrian.

Ofwat rated water and wastewater companies on the customer measure of experience (C-Mex) for residential customers, allocating financial rewards to companies with the top half of scores and penalties to those in the bottom half.

Portsmouth has secured a reward of £283,000 after achieving a C-Mex score of 86.22. Wessex scored 86.09 and will receive slightly more than £2 million, while Northumbrian scored 85.76 and will receive over £2.9 million.

Thames came bottom of the table with a C-Mex score of just 72.92. Southern received the second lowest score of 74.64 and will be penalised to the tune of £4.9 million. Affinity came third to last with a score of 77.88 and will receive a penalty of more than £1.5 million.

Companies were similarly rated on the developer services measure of experience (D-Mex) concerning parties such as property developers requesting a new connection. Severn Trent received the highest score of 89.70 and will be awarded nearly £3.9 million, while SES received the lowest score of 60.2 and will be docked £344,000.

The C-Mex and D-Mex schemes were introduced as part of PR19 as replacements for the Service Incentive Mechanism, which had been in operation since 2010.

C-Mex scores are based on two monthly surveys of random members of the public and customers that have recently contacted their water company asking how satisfied they were with their service and experiences.

In the case of the latter, customers are also asked whether they would recommend the company to their family and friends. These net promoter scores are measured and reportedly separately to the C-Mex scores used to determine financial incentives.

D-Mex scores are based on monthly qualitative surveys of developers that have recently completed a transaction with their water company as well as a set of quantitative metrics of the level of service provided.

Ofwat piloted the new mechanisms during 2019/20 but did not apply any financial incentives. The regulator said it has not drawn a comparison between the latest results and the scores during this “shadow year” due to subsequent changes to the methodology.

The total C-Mex rewards and penalties for 2020/21 are around £11.1 million and £24.4 million respectively, whilst the total D-Mex rewards and penalties amount to roughly £7.4 million and £6.9 million.

Ofwat interim chief executive David Black said: “We recognise companies have had to overcome challenges over the last year and we are pleased to see some improvements in customer service levels. Customers expect their water provider to deliver good customer service and those who fail to meet those expectations need to raise their performance.

“We want companies to continually strive to improve the quality of their customer experience. Those companies who are leading the sector have been rightly rewarded.

“We will continue to hold companies to account and expect those that are at the lower end of the league table to step up and learn from other companies in the sector to improve their performance more quickly so that customers do not lose out.”