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Thames Water fined £122.7m in biggest ever penalty Thames Water fined £122.7m in biggest ever penalty
(32 minutes later)
Thames Water has been fined £122.7m for breaching of rules relating to its sewage operations and shareholder payouts.Thames Water has been fined £122.7m for breaching of rules relating to its sewage operations and shareholder payouts.
It is the biggest ever penalty issued by the water regulator Ofwat.It is the biggest ever penalty issued by the water regulator Ofwat.
The regulator said the fines followed its "biggest and most complex investigation" and confirmed it would be paid by the company and its investors, not by customers.The regulator said the fines followed its "biggest and most complex investigation" and confirmed it would be paid by the company and its investors, not by customers.
A Thames Water spokesperson said: "We take our responsibility towards the environment very seriously."A Thames Water spokesperson said: "We take our responsibility towards the environment very seriously."
The fine issued by the water industry watchdog has ordered Thames Water to pay a £104.5m penalty for breaches of rules connected to its sewage operations.The fine issued by the water industry watchdog has ordered Thames Water to pay a £104.5m penalty for breaches of rules connected to its sewage operations.
That is on top of an additional penalty of £18.2m for breaches relating to shareholder payouts - known as dividends. It is the first time Ofwat has fined a water company over "undeserved dividends". In addition, Thames has been fined £18.2m for breaches relating to shareholder payouts - known as dividends. It is the first time Ofwat has fined a water company for this reason.
Thames Water is currently in "cash lock up" and no further dividend payments can be paid without approval from Ofwat. The regulator said the shareholder payouts were "undeserved" and did "not properly reflect the company's delivery performance for customers and the environment".
It comes as Thames continues to face heavy criticism over its performance in recent years following a series of sewage discharges and leaks.It comes as Thames continues to face heavy criticism over its performance in recent years following a series of sewage discharges and leaks.
The company is also struggling under a huge £20bn debt pile, but secured an emergency £3bn in March to stave off collapse.The company is also struggling under a huge £20bn debt pile, but secured an emergency £3bn in March to stave off collapse.
Thames Water is currently in "cash lock up" and no further dividend payments can be paid without approval from Ofwat.
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 said the penalties "will be paid by the company and its investors, and not by customers".
However, it comes as water bills for households in England and Wales rose last month by £10 per month on average, although costs vary depending on suppliers - Thames customer bills have gone up from £488 to £639 a year.
The supplier serves about a quarter of the UK's population, mostly across London and parts of southern England, and employs 8,000 people.The supplier serves about a quarter of the UK's population, mostly across London and parts of southern England, and employs 8,000 people.
It had expected to run out of cash completely by mid-April before it secured a rescue loan and the government has been on standby to put Thames into special administration.It had expected to run out of cash completely by mid-April before it secured a rescue loan and the government has been on standby to put Thames into special administration.
Regardless of what happens to the company in the future, water supplies and waste services to households would continue as normal.
David Black, the chief executive of Ofwat, said the fines were a result of a "clear-cut case where Thames Water has let down its customers and failed to protect the environment".David Black, the chief executive of Ofwat, said the fines were a result of a "clear-cut case where Thames Water has 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," he added."Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations," he added.
"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 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."
Releasing raw sewage has the potential to significantly damage the environment and poses a risk to human health for those swimming in a river or sea where sewage is being discharged.Releasing raw sewage has the potential to significantly damage the environment and poses a risk to human health for those swimming in a river or sea where sewage is being discharged.
Ofwat proposed the £104m fine in August last year, but confirmed the penalty, and the additional £18.2m fine on Wednesday.Ofwat proposed the £104m fine in August last year, but confirmed the penalty, and the additional £18.2m fine on Wednesday.
Environment Secretary Steve Reed said the "era of profiting from failure is over".
Earlier this month, Thames Water's boss Chris Weston told MPs the company's survival depended on Ofwat being lenient over fines and penalties.Earlier this month, Thames Water's boss Chris Weston told MPs the company's survival depended on Ofwat being lenient over fines and penalties.
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." 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.""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." The company said its bid to raise more investment was continuing. Thames is in discussions with private investment group KKR about a cash injection of up to £5bn.
But that deal being completed is also dependent on lenders to the company accepting a discount on the nearly £20bn they are owed. Some junior lenders could see their entire loan being written off.