Anglian Water customers in Cambridgeshire will see their bills slashed after the firm was ordered to return £8.5 million.
The company will repay the amount after regulator Ofwat fined 11 water companies that failed to meet targets between 2021-22.
A spokesperson for Anglian Water said: “The balance of our performance across all these areas meant that we incur an underperformance payment of £8.5m.
“This will ultimately be reflected in customer bills in for 2023-24.”
Almost £150m is planned to be taken off customers’ bills in the next financial year because of missed targets in areas such as water supply interruptions and pollution incidents.
Out of the 11 companies hit by the penalties, Thames Water is forced to return the highest figure of £51m.
The Anglian Water spokesperson added: “While we’ve performed well in some areas, we are not where we need to be in others.
“This is something we’re determined to improve upon."
Ofwat’s review comes after hosepipe bans were introduced during this summer’s heatwave, something Anglian Water were reluctant to call.
David Black, chief executive officer at Ofwat, said: “When it comes to delivering for their customers, too many water companies are falling short, and we are requiring them to return around £150m to their customers.
“We expect companies to improve their performance every year; where they fail to do so, we will hold them to account.”
The targets, known as performance commitments set in 2019, combine shared and individual targets on multiple issues.
These will remain in place until 2015 when the next price review is due.
Mr Black added: “All water companies need to earn back the trust of customers and the public and we will continue to challenge the sector to improve.”
Anglian Water have previously been fined for pollution issues in some of Cambridgeshire’s waterways.
In June, the firm and a contractor were ordered to pay £60,000 after raw sewage killed more than 2,400 fish in Stanground Lode.
That followed a fine of £18,000 for polluting Pig Water Drain in Yaxley in May.
At the time, district judge Ken Sheraton also ordered Anglian Water to pay £10,957.80 in costs to the Environment Agency.
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