Northumbrian Water is the only company to achieve the highest rating in its sector in national results released by the Environment Agency.
In the agency鈥檚 Environment Performance Assessment for 2018, of the nine water companies, only Northumbrian scored the highest four-star 鈥済reen鈥 rating.
This comes as the agency described efforts by water and sewage companies to protect the environment as 鈥渟imply unacceptable鈥.
Overall water company performance has deteriorated, which reverses the trend of gradual improvement in the sector since the rating system began in 2011. Serious pollution incidents increased in 2018, causing damage to the nation鈥檚 rivers and wildlife.
Environment Agency chairman Emma Howard Boyd, who has previously warned water companies they would face a tougher regulatory approach with increasing inspections, pledged that the Environment Agency would continue to work with Ofwat to look at financial penalties to drive better environmental performance.
The annual report rates each of the nine water and sewerage companies in England on a range of measures, including serious pollution per km of sewer pipes, supply resilience, self-reporting of pollution and complying with permits.
Ms Howard Boyd said: 鈥淣orthumbrian Water have shown that it can be done. For the previous two years they were at the bottom of the EPA ratings with a poor two-star rating (鈥榬equires improvement鈥), due to pollution incidents and inadequate compliance with environmental permits.
鈥淭hey have risen to four stars (industry leading company), the only company to achieve the highest rating, and the only company to improve its performance. All companies should be aiming for a four-star rating.
鈥淚t makes business sense. In a world where environmental concerns increasingly drive people鈥檚 behaviour, consumers demand better.鈥
Richard Warneford, wastewater director at Northumbrian Water Group, said: 鈥淲e are absolutely thrilled with the report, which shows that we are really leading the way in the water industry when it comes to our environmental performance.
鈥淭his year we have achieved a 鈥榞reen鈥 result in all six of the metrics that the Environment Agency assess us on, leading to a four-star rating, the highest rating we could achieve, and only one other water company has achieved 鈥榞reen鈥 against all EPA metrics since 2012.
鈥淥ver the last two years, we have been through a transformation in many of our water and wastewater processes and I am delighted that by working with partners, stakeholders and regulators, we have proven that we live our values and deliver for both customers and the environment.鈥
Over the last two years, the water company has adopted a new sampling and analysis process at its water treatment works, as well as investing in a 拢1m project to proactively assess its sewer network close to watercourses and other activity to upgrade vulnerable assets.
Environment Agency executive director of operations Dr Toby Willison, who visited the North East on Monday, said: 鈥淲ater companies need to clean up their act. People expect water companies to improve the environment, not pollute rivers and ensure secure supplies of water.
鈥淲ith only one exception, none of the companies are performing at the level we wish to see, the country expects and the environment needs. We will continue to challenge CEOs to improve company performance, and we will take strong and appropriate enforcement action.
鈥淐ompanies performing well have a positive ripple effect on the natural environment and communities in their regions. We want all water companies to meet the expectation of their customers, the needs of environment and learn from the best practice that the leading company is demonstrating.鈥
Severn Trent Water, United Utilities and Wessex Water dropped from four stars to three stars, meaning they must improve their performance to reduce their impact on the environment.
Anglian Water and Thames Water remained on three stars and Southern Water, South West Water and Yorkshire Water achieved just two stars for their 鈥渦nacceptable level of performance鈥.
The agency slapped South West Water with a red rating for pollution incidents for 鈥渃onsistently demonstrating unacceptable performance鈥, while Southern Water and Thames Water failed to demonstrate they had robust plans to maintain secure water supplies.
