The customers of a number of water companies are set to receive a share of a £67m windfall after the firms failed to meet regulatory standards.

Ofwat, the industry watchdog for England and Wales, revealed on Thursday which firms would be able to charge their customers more for good performance and those who would have to hand money back following an annual performance review.

The regulator said that of those to miss their 2020/21 financial year performance commitments, Thames Water would have to slash bills by £53m in the year ending March 2023.

The penalty amounts to the highest charge out of the 17 water and waste-water suppliers – imposed because water supply is a monopoly service and firms are encouraged to invest to improve their offering.

The rebate equates to a cut of £3.50 per household over the 12-month period.

Southern Water was told to forgo almost £46m while Southwest Water was to hand back more than £15m.

Others managed to exceed the performance targets, covering things like leak repair, sewage discharges and customer satisfaction.

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United Utilities was told it could charge its north western customers an extra £20m.

Severn Trent was granted the highest award at £25m.

Thames Water said of its penalty: “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.”

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