Water companies will be forced to slash customer bills by more than £67 million next year in England and Wales, as many failed to live up to standards set by themselves and regulator Ofwat.

Thames Water, the supplier for the London region, will have to slash bills by £53 million in the year ending March 2023.

It was given the highest charge out of 17 water and waste-water suppliers across the two nations, but Southern Water will also have to forgo nearly £46 million and Southwest Water more than £15 million.

Others blew through their targets and will be allowed to reap rewards, with United Utilities able to charge their north western customers an extra £20 million and Severn Trent £25 million.

Water companies hold a monopoly on services in their area so they are rewarded, or punished, according to a series of targets to encourage them to invest in their networks and customer service.

The regulator said: “Ofwat has today confirmed the payments due to companies or customers as a result of water company performance against their 2020-21 performance commitments. Overall, £67 million will be repaid to customers.

“The largest outperformance payment will be to Severn Trent Water, which will receive £25 million. Thames Water and Southern Water will return £53 million and £46 million to their customers respectively.”

The payments will not be made up front, rather they are deducted from customers’ bills in the next financial year.

It is unlikely to save customers a huge amount of money. Thames Water, for instance, serves around 15 million households, suggesting an average saving of around £3.50 each over the year.

Thames Water said: “Improving our performance, particularly in customer service, supply interruptions, sewer flooding and pollutions, is one of our biggest priorities as we turnaround our business.

“Our customers rightly expect to have a great service from us every time and while we’re heading in the right direction, we have a long way to go.

“We’re investing in additional staff and new ways of working to improve quality for customers and we’re determined to do better.

“We are also committed to investing in our assets and systems, and working closely with communities and other stakeholders to address operational challenges.”