Severn Trent was one of only four water companies that has not underperformed, according to the industry watchdog.

Ofwat has this week published its annual Water Company Performance Report, which shows that poor performance has cost the water sector £157.6 million this year.

This includes companies falling further behind on key targets for pollution and internal sewer flooding.

Customers' bills will now be reduced to reflect the performance penalties in 2025-26, following the end of period calculation.

However, Severn Trent – which supplies 4.6 million households and businesses across the West Midlands and Wales – has been bucking the trend, with Ofwat praising the firm.

Ofwat CEO, David Black said: "This year's performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.

"It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings.

"Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the government or regulators tell them to act.

"As we look towards the next price control, the challenge for water companies is to match the investment with the changes in company culture and performance that are essential to deliver lasting change.

"However, we are beginning to see that some companies are beginning to change their culture and adopt a more innovative and forward-thinking approach to tackling pollution.

"Severn Trent is taking action to cut sewage overflows with 617 improvements at 467 sites, delivered by over 400 specialist employees with plans in place for further investment. We need to see more firms showing the same sense of urgency and action."

A Severn Trent spokesperson said: "Our strong performance has been reflected through the highest four-star rating for environmental performance by the Environment Agency for the fifth consecutive year, and Ofwat's rating of our five-year investment plan as 'Outstanding'.

"We're rapidly delivering our industry leading £450 million programme to cut spills at 900 locations this year.

"This programme has been made possible because of the £1 billion accelerated funding from investors to help deliver immediate benefits on the things that matter most to customers."