First collective action brought against water company for overcharging
A legal claim has been made against Severn Trent Water, which is accused of abusing its dominant market position by underreporting the extent of pollution discharge and overcharging customers as a result.
The claim, by Professor Carolyn Roberts, an environmental and water consultant represented by Leigh Day, is the first such collective action. Leigh Day says further cases will be brought against Thames Water, United Utilities, Anglian Water, Yorkshire Water and Northumbrian Water in the coming months.
A press release by Leigh Day said:
All six water companies are accused of underreporting the number of times they cause pollution incidents by spilling or discharging sewage into waterways in breach of environmental rules.
This is the first collective action case where the competition abuse centres on compliance with environmental laws and reporting responsibilities to regulators.
Professor Carolyn Roberts is bringing the claims on behalf of more than 20 million household customers who have been overcharged because of the companies allegedly abusing their monopoly position. The claim against Severn Trent Water is brought on behalf of 8 million customers.
The value of the claim against Severn Trent Water is estimated at over £330 million and the six claims are expected to lead to compensation payments of over £800 million in total, if successful.
The legal claims allege that the six water companies have been breaking competition law by misleading the Environment Agency and Ofwat as to the number of pollution incidents, being discharges or spills of untreated sewage they made into rivers, lakes, coastal areas, and other waterways causing damage to the environment.
Water companies are required to report such incidents as part of their legal duties and responsibilities, but it appears many pollution incidents have gone, and continue to go, unreported. The number of pollution incidents a company reports to their regulators is an important factor in determining the price water companies can ultimately charge for their services.
Professor Roberts argues in her legal claims that, if the water companies had correctly reported the number of pollution incidents, performance penalties would have been applied and this would have reduced how much customers were charged.
Anyone who has paid for a water bill to one or more of these water companies from April 2020 may be entitled to compensation if the case is successful; customers of Severn Trent Water may be entitled to compensation if they paid for a water bill from April 2017.
Compensation is being sought through competition opt-out collective proceedings, which allow legal claims to be brought by a single class representative on behalf of a group, or groups, of affected individuals in the Competition Appeal Tribunal.
Water UK, representing the industry, said: “This highly speculative claim is entirely without merit. The regulator has confirmed that over 99% of sewage works comply with their legal requirements. If companies fail to deliver on their commitments, then customer bills are already adjusted accordingly.”