Thames Water has been fined £122.7m by the water services regulator Ofwat for separate breaches relating to its wastewater operations and dividend payouts.

The company and its shareholders will pay a £104.5m penalty for its sewage treatment breaches, the largest single penalty Ofwat has ever issued.

Thames Water must also pay an additional £18.2m fine for rule breaches relating to dividend payments it made to shareholders, after Ofwat said that Thames Water’s decision to make dividend payments “does not properly reflect the company’s delivery performance”.

A spokesperson for Thames Water 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.”

In the water regulator’s most complex ever investigation, Ofwat had been looking into all UK wastewater companies’ operation, management and maintenance of their sewage treatment works and sewerage networks.

As part of that investigation, in August 2024, Ofwat consulted on a proposal to impose a £104.5m fine on Thames Water, alongside an enforcement order which would require the company to take steps to ensure its compliance. The regulator has today finalised both the penalty and enforcement order.

Ofwat chief executive, David Black, said the investigation had revealed a “clear-cut case” where Thames Water had “let down its customers and failed to protect the environment”.

“Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations,” Black commented. “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.

“This decision provides certainty for the company for both its past failures and what we expect from the company to comply with its obligations in future.”

Environment Secretary, Steve Reed, said that the Government had launched the “toughest crackdown on water companies in history”.

“Last week we announced a record 81 criminal investigations have been launched into water companies,” Reed commented. “Today, Ofwat announces the largest fine ever handed to a water company in history.

“The era of profiting from failure is over. The Government is cleaning up our rivers, lakes and seas for good.”

Ofwat also confirmed its decision to impose an £18.2m penalty on Thames Water following a separate investigation which found that the company had broken rules relating to the payment of dividends.

This penalty marks the first time Ofwat has used its powers to take enforcement action against a water company where it believes the decision to make dividend payments hadn’t reflected the company’s performance.

“The dividends were declared following a consideration of the company’s legal and regulatory obligations,” a Thames Water spokesperson added. “Our lenders continue to support our liquidity position and our equity raise process continues.”

Black added: “We are clear that dividends must be linked to performance for customers and the environment. We will not stand by when companies pay undeserved dividends to their shareholders.

“This is the first time we have used these new powers, and this sets the standard. We will protect customers from water companies that seek to take money out of their businesses, where their performance does not merit it.”

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