(Reuters) – Britain’s water regulator plans to fine debt-laden Thames Water 104 million pounds ($133 million), close to the maximum penalty allowed, after an investigation into historic sewage spills.
Thames Water, the country’s biggest supplier, is at the centre of a crisis over sewage flowing into rivers and seas which has fouled the environment, prompting public outrage and forcing the government to promise to clean-up the industry.
Industry regulator Ofwat said on Tuesday that the fines it was proposing, which include a 47 million pound penalty for Yorkshire Water and a 17 million pound fine for Northumbrian Water, would now be subject to a consultation.
The fines relate to an investigation Ofwat started two years ago into water companies’ performance in terms of sewage treatment over the 2017-2022 period.
The fine for Thames Water equated to 9% of its relevant turnover, just below the 10% top penalty Ofwat can impose.
Such a fine would further pressure heavily indebted Thames Water, which is battling to raise new equity and has warned that without new investment it could run out of money next May, putting renationalisation on the cards.
Responding to the proposed penalty, Thames Water, which supplies about a quarter of British households, said it took the sewage spills “very seriously” and would continue to cooperate with Ofwat’s investigation process.
“We are encouraged that Ofwat recognises that in order to resolve the issues identified, any redress needs to be deliverable, affordable and financeable,” a Thames Water spokesperson said.
Northumbrian Water said in response to the proposed fine that it didn’t recognise some of Ofwat’s standards of compliance, while Yorkshire Water said its waste water treatment performance had improved over the last two years.
Ofwat said the companies had failed to ensure that untreated waste water spilled into rivers only in exceptional circumstances, and that waste water treatment works had not been properly maintained.
“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,” Ofwat Chief Executive David Black said in a statement.
The companies would not be able to recover the money for proposed penalties from customers, the regulator said.
The government welcomed Ofwat’s planned fines.
“The unacceptable destruction of our waterways should never have been allowed,” Environment Minister Steve Reed said. “This government will fundamentally reform the water sector.”
Thames Water is owned by Ontario Municipal Employees Retirement System, the UK’s Universities Superannuation Scheme, a unit of the Abu Dhabi Investment Authority and others.
($1 = 0.7833 pounds)
(Reporting by Sarah Young in London and Shanima A in Bengaluru; Editing by Janane Venkatraman, Kylie MacLellan and Bernadette Baum)
