Overview

• Ofwat imposed a £122.7 m penalty—the largest ever issued by the regulator—allocating £104.5 m for wastewater rule breaches and £18.2 m for dividend violations, with costs borne by the company and investors rather than customers.
• The watchdog’s probe uncovered systemic failures to build, maintain and operate adequate sewage infrastructure, resulting in frequent overflows and serious environmental harm.
• This action marks the first time Ofwat has penalised a water firm for ‘undeserved’ dividend payments, highlighting payouts of £168.8 m in 2023 and 2024 despite poor performance.
• Burdened by roughly £19 billion in debt and supported by a £3 billion emergency loan, Thames Water is pursuing a sale to US private equity firm KKR to stabilise its finances.
• Environment Secretary Steve Reed hailed the fine as part of the toughest regulatory crackdown on water companies, promising more record penalties and criminal investigations to enforce higher standards.