Thames Water Faces £122 Million Penalty Following Ofwat Inquiry

Published on: 28 May, 2025
Updated on: 28 May, 2025

By David Reading and Martin Giles

Thames Water has been fined more than £122 million by regulator Ofwat following an investigation into its operations.

The water industry regulator imposed the penalty – the largest it has ever issued – for breaking rules over sewage spills and shareholder payouts.

Ofwat said the company had “let down its customers and failed to protect the environment” and said the fines would be paid by the company and its investors, not by customers, who have already faced significant increases in their water bills.

Zöe Franklin MP by the River Wey in Guildford

Guildford’s MP Zoe Franklin, commenting on the news, told The Dragon this evening: “Thames Water have failed to invest in the right infrastructure, they continue to allow sewage to flow into rivers across the country, including our fabulous River Wey and they continue to pay bosses bonuses.

“At this point Ofwat has finally cracked down on them and said, no, you will be fined £122 million. And, frankly, I think it should be the final nail in Thames Water’s coffin as a company. I really want to see it moved into being a public benefit company.”

See: ‘Appalling Increase’ in Thames Water Sewage Dumping, Says Guildford’s MP

Faced with the £122.7 million penalty, announced today (May 28), Thames Water said the company took its “responsibility towards the environment very seriously”, and added it was continuing its search for new investment as it struggles under heavy debt.

Thames continues to face fierce criticism over its performance in recent years following a series of sewage discharges and interruptions to water supply.

See: Anger with Thames Water Remains Over Its Handling of Water Supply Interruptions

The £122.7 million penalty includes £104.5 million for breaches of rules connected with the company’s sewage operations.

Releasing raw sewage can significantly damage the environment and poses a risk to human health for people swimming in rivers or the sea where sewage is being discharged.

Water companies are allowed to release untreated sewage into rivers and seas – storm overflows – when it rains heavily, to prevent homes being flooded. But Ofwat said its findings suggested three quarters of Thames Water’s storm overflows were spilling “routinely and not in exceptional circumstances”.

The total penalty imposed by Ofwat also includes £18.2 million for breaches relating to shareholder payouts (dividends). One such payment worth £37.5 million, which was made in October 2023 to the firm’s holding company, and another £131.3 million dividend made in March 2024, were found to have broken the rules.

The regulator said the shareholder payouts were “undeserved” and did “not properly reflect the company’s delivery performance”.

The money from the fines will ultimately go to the Treasury, but no firm decision has been made about what it will be used for.

Ofwat’s David Black

David Black, chief executive of Ofwat, said Thames Water had let down its customers and failed to protect the environment.

He added: “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.”

At present Thames Water can make no further dividend payments without approval from Ofwat.

The dire state of the company’s finances emerged around two years ago. Earlier this year Thames was granted a £3bn rescue loan earlier to stave off collapse.

Chris Weston the CEO of Thames Water responding to questions and criticisms at a public meeting in Godalming in April 2024.

Earlier this month, Thames Water’s boss, Chris Weston, told MPs the company’s survival depended on Ofwat being lenient over penalties.

Last week, the company decided to “pause” its scheme to pay out big bonuses to senior executives linked with securing its £3 billion rescue loan.

Today 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.

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

According to the BBC, Thames Water has said its bid to raise more investment is continuing and the company is in discussions with a private investment group about a cash injection of up to £5 billion.

A year ago in Bramley

See: Bramley Water Contamination – Residents Noticed Fuel Smells At Least Three Years Ago

Twelve months ago Thames Water introduced a precautionary “do not drink” notice to hundreds of Bramley properties as water quality results indicating elevated levels of hydrocarbons following a historic fuel leak at the village petrol station.

Subsequently, the company began working to replace a section of pipework near the petrol station. But the petrol leakage was not the fault of the water company and is believed to have been caused by a fractured fuel pipe on a filling station forecourt.

The effects of the contamination are ongoing.

Cllr Jane Austin

Cllr Jane Austin, the Waverley borough councillor for Bramley and Wonersh (Con) said: “Those suffering from repeated sewage leaks in Alfold may be comforted by the Thames Water fines announced today, but I think they would be far happier to see prompt and decisive action to upgrade their leaking groaning infrastructure.

“A year on from the drinking water restriction in Bramley and, although that particular incident was not of TW’s making, residents are receiving dire service from the water company. Presently much of Bramley can’t flush upstairs toilets because Thames Water has reduced the water pressure to reduce bursts.

“No less than three sets of traffic lights on my school run – more leaks and digging up newly laid tarmac, disrupting local people and businesses once again. It’s simply not good enough – pushing for service improvements takes up much of my casework – come on Thames Water.”