𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Troubled utility giant Thames Water has agreed to pay an initial £24.5 million of its record £122.7 million in fines by the end of September, under a payment plan sanctioned by regulator Ofwat.

The industry watchdog, which levied the penalties in May for failures concerning sewage treatment and the payment of dividends, stipulated that a fifth of the total fines would be due in this first instalment.

Thames Water has stated that these fines will not be covered by customer bills.

However, the payment of the remaining 80 per cent is contingent on the financial stability and future of the debt-laden water supplier, which is currently teetering on the brink of potential temporary nationalisation.

This means the majority of the fines may not be settled for up to five years.

Ofwat confirmed that the outstanding amount will be paid either 30 calendar days after Thames Water secures a rescue financing deal and demonstrates sufficient cash liquidity, or, if the company is placed into a special administration regime by the Government, 30 calendar days after it exits the insolvency process.

The regulator has set a final “backstop date” of March 31, 2030, for the full payment of the remaining penalties.

open image in gallery

The fines were originally due by August 20, but Thames Water requested a revised payment schedule citing its ongoing financial difficulties.

Campaign group River Action slammed it as a “sweetheart deal”.

James Wallace, chief executive of River Action, said: “It is outrageous that Thames Water has been allowed to kick its fine down the road.”

Lynn Parker, senior director of enforcement at Ofwat, said: “This payment plan continues to hold Thames Water to account for their failures but also recognises the ongoing equity raise and recapitalisation process.

“Our focus remains on ensuring that the company takes the right steps to deliver a turnaround in its operational performance and strengthen its financial resilience to the benefit of customers.”

Ofwat announced the fines in May after it said an investigation into Thames Water’s sewage treatment works found “a series of failures by the company to build, maintain and operate adequate infrastructure”.

The utility giant was ordered to pay £104.5 million for the sewage probe, plus £18.2 million for breaking rules over dividend payments, the industry’s first dividend-related fine.

open image in gallery

Ofwat pointed to nearly £170 million worth of dividend payments by Thames in October 2023 and March 2024, which the watchdog said were not justified.

But the fines come at a time when Thames is already under extreme financial stress and its chief executive Chris Weston has previously told MPs that if the company faced fines that were too high, it would struggle to get new investment.

Thames Water is feared to be edging closer to a potential temporary nationalisation after the Government appointed insolvency specialists FTI Consulting earlier this month to step up contingency planning in case the supplier collapses.

These plans could see Britain’s biggest water firm placed into a special administration regime (SAR), meaning it would be put into an insolvency process.

Thames Water, which has 16 million customers, remains locked in talks over a rescue funding deal with a number of senior creditors.

But it recently raised doubts over whether the creditors’ refinancing and restructuring plans could be completed, which could ultimately result in a state rescue deal.

In a statement on Wednesday, Thames Water said: “The company continues to work closely with stakeholders to secure a market-led recapitalisation which delivers for customers and the environment as soon as practicable.”