Thames Water agrees to pay out £86m for bills blunder

Thames Water today agreed to pay £86 million in compensation for “unacceptable” mistakes that led to customers paying more than they should.

The supplier, which has 14 million customers in London and the Thames Valley, was found to have hugely overestimated the number of homes at risk from sewer flooding in 2009 and 2010.

It was allowed to “claw back” the estimated £130,000 cost of protecting each vulnerable home in its calculations for customer bills between 2010 and 2015.

But regulator Ofwat found more than 600 of the homes should never have been on the “high-risk” list. In a damning report Ofwat said: “Thames Water’s misreporting has prejudiced the regulatory regime and compromised Ofwat’s ability to regulate Thames Water.

“The regulatory regime relies on the provision of data which is reliable, accurate and complete …  Ofwat considers that misreporting of regulatory information is a serious contravention with serious consequences.”

But the watchdog said it would impose only a token £1 penalty after the supplier offered to reduce future bills by £79 million — the same amount it was found to have overcharged.

Thames Water will also pay £2 million into a fund for those who struggle to pay their bills and £5 million to protect rivers. A spokesman said: “We made a mistake in some of our 2009/10 sewer flooding statistics. Ofwat agree this was not deliberate.”