Water regulator Ofwat has proposed a net reduction of £240 million in customer bills after assessing how water companies performed against service targets in 2025-26.
Around £107 million of that total will be returned directly through lower bills in 2027-28, with final determinations due by 15 December 2026.
The proposals follow Ofwat's system of Outcome Delivery Incentives (ODIs), which reward or penalise water companies based on performance against targets covering areas such as leakage, customer experience and environmental outcomes.
Yorkshire Water and Thames Water face the largest underperformance payments, to be applied from April 2027.
Severn Trent Water and Northumbrian Water will receive the largest outperformance payments, reflecting stronger results against their targets.
Ofwat said the figures are draft and that the impact on individual household bills will vary by company and customer type, as changes depend on a range of factors beyond ODI payments alone.
The regulator approved £104 billion of investment at the 2024 price review to improve services and clean up rivers, lakes and seas.
Ofwat said the responsibility for delivering on that investment programme now rests with the water companies themselves.
A fuller assessment of company performance will be published later this month in the Operational Performance Report.
The draft ODI determinations consolidate individual companies' own annual report assessments into a single publication, giving a comparable view of performance across the sector for 2025-26.
