Ofwat’s latest changes to Outcome Delivery Incentives (ODIs) and C-MeX are more than regulatory detail. Together, they place greater emphasis on day-to-day operational performance and strengthen the link between customer experience and financial performance.
A more demanding ODI regime
Under PR24, Ofwat has increased its focus on the areas that matter most to customers and the environment. That includes pollution incidents, water supply interruptions, sewer flooding, storm overflows, leakage, and biodiversity. It has also introduced a common storm overflows performance commitment and a biodiversity enhancement commitment for all water companies.
The financial exposure attached to several of these measures is meaningful. In its final determinations, Ofwat set collars and caps including -1% RoRE for water supply interruptions, -0.75% for total pollution incidents, and -0.6% for internal and external sewer flooding.
Ofwat’s sector summary sets out the scale of improvement expected over 2025–30, including 17% lower leakage, 27% less sewer flooding in homes, and more than 45% fewer storm overflow spills compared with 2021 levels. These are demanding targets, placing greater importance on planning quality, and field delivery.
A more operational C-MeX measure
C-MeX has evolved in a similar direction. Under the previous 2020–25 framework, the measure was split 50% customer service survey and 50% customer experience survey. Under the new 2025–30 definition, that balance has shifted to 66.7% customer service survey and 33.3% customer experience survey.
That change increases the weighting placed on customers’ direct service interactions with their water company. In particular, it gives greater prominence to how well companies handle contacts when customers need support.
What this means for water operators
For operators, these changes place more value on consistent operational control. Strong performance in 2026 will depend on the ability to run the day-to-day operation well. We expect the highest performing operators will be planning work accurately, managing incidents proactively, and communicating effectively with customers when issues arise.
This is especially important in the context of recent sector performance. Ofwat’s 2024–25 water company performance report recorded net sector underperformance payments of more than £260 million [3[1]] and noted that pollution incidents had worsened for most companies. The latest ODIs will likely increase that figure.
What this means for contractors
The implications for contractors are just as significant. In 2026, contractors will be judged more on how work is delivered and what effect it has on customer outcomes. For contractors there will be more focus on the measures that matter most to customers. Expect operators to be setting more emphasis on right-first-time delivery, outage control, incident prevention, communication quality, and reinstatement standards.
As C-MeX gives more weight to direct service interactions, delivery partners have a clearer role in protecting customer outcomes. Contractors that reduce repeat visits and minimise disruption will be seen to be supporting better customer outcomes and will be more valuable to their client operators.
A clearer link between operations and outcomes
Taken together, the ODI and C-MeX changes point in the same direction. Ofwat is placing greater weight on what happens in live operations and in customer interactions, and less room is left for poor execution to be absorbed elsewhere in the system.
For water companies, that means tighter operational discipline will matter even more in 2026. For contractors, it means delivery quality will shift from measuring throughput towards doing what’s best for customer impact.
The shift is important because it reinforces a simple point: in the current regulatory environment, operational performance, customer experience and commercial performance are increasingly part of the same conversation.
