(Reuters) -Water companies in England and Wales, including Thames Water and Yorkshire Water, will have to return a total of 114 million pounds ($139 million) to customers next year after missing key targets, industry watchdog Ofwat said on Tuesday.
The rebate will come off customers' bills for next year.
Only five out of 17 water companies Ofwat oversees achieved their targets on reducing pollution incidents, while half met their performance commitment on leakages in the 2022-2023 fiscal year, the regulator said.
Ofwat's annual performance report on the water companies evaluates how they fared against a set of metrics including pollution incidents, customer service and leakage.
The water industry in England and Wales, which was privatised in 1989, has come under intense scrutiny over sewage releases which have dirtied rivers and beaches and shaken public confidence in the sector.
"It is not going to be easy for companies to regain public trust, but they have to start with better service for customers and the environment," Ofwat CEO David Black said.
Earlier this year, Thames Water was rescued from a financial crisis after investors agreed to inject 750 million pounds as it buckled under a 14 billion pound debt pile.
The crisis sparked questions about how the utilities have piled up debt, paid out dividends to shareholders and awarded executive bonuses, while failing to invest in infrastructure.
"We're making progress and we'll continue to engage and work with Ofwat as we implement our plan," a Thames Water spokesperson said.
South East Water and Pennon (LON:PNN) Group-owned Bristol Water are among other firms that Ofwat's report categorised as "lagging". No company was ranked in the "leading" category.
"We have written to the CEOs of every water company in the lowest category of today's report and my ministerial team and I will meet them in person to scrutinise their improvement plans," Britain's Environment Secretary Therese Coffey said.
($1 = 0.8205 pounds)