Thames Water hit with record £123m fine from watchdog

Ofwat issues largest ever penalty to water giant after two investigations into wastewater and dividend payments

Thames Water has been fined £122.7m - the largest penalty Ofwat has ever issued - after two investigations into wastewater and dividend payments.

After the regulator said it “failed to protect the environment”, the water giant will pay £104.5m for breaches of rules relating to its wastewater operations, Ofwat confirmed on Wednesday.

Thames Water will pay an extra £18.2m for breaking rules related to dividend payments, the first-ever dividend-related fine, the watchdog added.

Thames Water is England’s biggest water firm, supplying around 16 million households across London and the South East (Getty)

The penalties follow what Ofwat called its biggest and most complex investigation of wastewater operation, management and maintenance of sewage treatment works and sewerage networks across the sector.

Its chief executive, David Black, said: “Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations.

“The company also failed to come up with an acceptable redress package that would have benefited the environment, so we have imposed a significant financial penalty.”

The regulator said the money will be paid by the utility giant and its investors, not by customers.

Environment secretary Steve Reed says ‘the era of profiting from failure is over’ (PA)

Privatised water companies have faced public outrage over the extent of pollution, the lack of investment in water infrastructure, rising bills, high dividends and executive pay and bonuses.

Thames Water is also in about £19bn of debt and earlier this year narrowly escaped running out of cash by agreeing a further £3bn loan.

The company also hiked consumer water bills for its 16 million customers by an average of 31 per cent in April.

Thames Water is England’s biggest water firm and supplies around 16m households across London and the South East.

Environment secretary Steve Reed said: “The era of profiting from failure is over. The government is cleaning up our rivers, lakes and seas for good.”

After the penalty was issued, a Thames Water spokesperson said: “We take our responsibility towards the environment very seriously and note that Ofwat acknowledges we have already made progress to address issues raised in the investigation relating to storm overflows.

“The dividends were declared following a consideration of the company’s legal and regulatory obligations.

“Our lenders continue to support our liquidity position and our equity raise process continues.”