Water Services Regulation Authority (Ofwat), the body responsible for economic regulation of the privatised water and sewerage industry in England and Wales, has announced that it is proposing fines totaling £168 million ($213 million) for three water companies due to their failure to manage wastewater treatment facilities and sewer networks effectively. This marks the first set of outcomes from Ofwat’s largest investigation to date.
The proposed penalties for consultation are £104 million ($132 million) for Thames Water, £47 million ($59 million) for Yorkshire Water, and £17 million ($21 million) for Northumbrian Water.
These fines relate to the companies’ management of wastewater treatment works and sewer networks, including their handling of storm overflows. Storm overflows are designed to release water during exceptional circumstances, such as heavy rainfall or snowfall, to prevent sewage from flooding homes.
Ofwat’s investigation found that all three companies have allowed untreated wastewater to be discharged from storm overflows more frequently than legally permitted, causing environmental and customer harm. Also, the companies have demonstrated a strong link between high spill levels and operational issues at wastewater treatment sites, indicating inadequate operation and maintenance of these facilities. Ofwat also noted that the companies have failed to upgrade infrastructure as needed to meet the evolving demands of the local areas they serve and have been slow to grasp their obligations regarding storm overflow pollution control and lacked the necessary information, processes, and oversight for compliance.
The extent of these breaches varies among the companies, hence Ofwat is also proposing enforcement orders requiring each company to address the identified issues to meet their legal and regulatory responsibilities.
The proposed penalties cannot be passed on to customers, and Ofwat will ensure that customers are not charged twice for any additional maintenance required.
Ofwat’s Chief Executive David Black said, “Ofwat has uncovered a catalogue of failure by Thames Water, Yorkshire Water and Northumbrian Water in how they ran their sewage works and this resulted in excessive spills from storm overflows. Our investigation has shown how they routinely released sewage into our rivers and seas, rather than ensuring that this only happens in exceptional circumstances as the law intends.”
He added, “The level of penalties we intend to impose signals both the severity of the failings and our determination to take action to ensure water companies do more to deliver cleaner rivers and seas. These companies need to move at pace to put things right and meet their obligations to protect customers and the environment. They also need to transform how they look after the environment and to focus on doing better in the future.”
Black said that looking to the future Ofwat will transform companies’ performance under their new price control that starts in April next year. Ofwat will reduce spills from sewage overflows by 44 percent by 2030 compared to 2021 levels.
These proposed findings are the first outcomes in Ofwat’s broader investigation, which remains a priority. Ofwat will continue to progress with the eight additional cases under review.