Thames Water hit with biggest ever fine of 1227m over pollution and dividends

Thames Water has been fined £122.7 million after two investigations into wastewater and dividend payments – the largest penalty Ofwat has ever issued, the regulator said.

The utility giant will pay £104.5 million for breaches of rules relating to its wastewater operations, after Ofwat said it “failed to protect the environment”.

Ofwat 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.”

Thames Water will pay an extra £18.2 million for breaking rules related to dividend payments, the first ever dividend-related fine in the industry, Ofwat said.

The watchdog pointed to dividends of £37.5 million in October 2023 and £131.3 million in March 2024.

The firm is currently in a “cash lock-up” period and no more dividends can be paid without approval from the regulator.

Mr Black added: “We will not stand by when companies pay undeserved dividends to their shareholders.”

Ofwat said the money must be paid by the utility giant and its investors, not by customers.

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

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

The company also increased consumer water bills for its 16 million customers by an average of 31% in April.

Earlier in May, senior bosses at the firm told MPs on the cross-party Environment Committee that if the company faced fines that were too high, it would not be able to get new investment.

Thames is in the process of a financial restructuring, and is trying to push through a sale to US investment firm KKR.

Ofwat, meanwhile, is under pressure to show it is holding water firms to account amid a Government review into how the industry is regulated.

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.”

The wastewater fine was first proposed last year and confirmed on Wednesday.

A Thames Water spokesman 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.”

Mike Keil, chief executive of the Consumer Council for Water, said: “These failures amount to a serious betrayal of customers and the environment by Thames Water and come at a time when our research shows it is already the least trusted water company in England and Wales.

“We’re pleased to see Ofwat using its new powers to block unjustified dividends, which shareholders should have to earn through the company delivering on its commitments to customers and the environment.

“Thames Water customers are paying more than ever before for their water and sewerage services and they are impatient for improvements to the company’s customer service and environmental performance.”

Published: 28/05/2025 by Radio NewsHub