Ofwat has today proposed that three water companies will be fined a total of £168 million for failing to manage their wastewater treatment works and networks, as part of the first batch of outcomes from its biggest ever investigation.

Ofwat (alongside the Environment Agency) launched an investigation into all water and wastewater companies in England and Wales November 2021. This came in response to concerns that companies may not be treating as much sewage at their treatment works as they should be, resulting in the discharge of sewage to the environment outside of their permits. These concerns have arisen from the analysis of data from recently installed monitoring equipment at wastewater treatment works which were installed as part of an ongoing tightening of permit conditions.

The penalties proposed for consultation will see Thames Water fined £104 million, Yorkshire Water fined £47 million and Northumbrian Water fined £17 million.

The regulator can impose a financial penalty on companies of up to 10% of turnover. For each company, the fines applied in the investigation equates to:

• Thames Water – 9% of turnover
• Yorkshire Water – 7% of turnover
• Northumbrian Water – 5% of turnover

The penalties relate to their management of wastewater treatment works and wider sewer networks including their operation of storm overflows.

Ofwat has found that all three companies have:

• Failed to ensure that discharges of untreated wastewater from storm overflows occur only in exceptional circumstances which has resulted in harm to the environment and their customers.
• Shown a strong correlation between high spill levels and operational issues at wastewater treatment sites which points to these companies not having properly operated and maintained their wastewater treatment works.
• Failed to upgrade assets, where necessary, to ensure they meet the changing needs of the local area they serve.
• Been slow to understand the scope of their obligations relating to limiting pollution from storm overflows and failed to ensure that they had in place the necessary information, processes and oversight to enable them to properly comply with those requirements.

However, the scale of the breaches Ofwat has found differs between each of the wastewater companies.

In addition to the proposed financial penalties, Ofwat is also consulting on proposed enforcement orders which will require each company to rectify the problems Ofwat has identified to ensure they comply with their legal and regulatory obligations.

Companies will not be able to recover the money for any proposed penalties from customers and Ofwat will ensure that customers are not charged twice where additional maintenance is required.

“Ofwat has uncovered a catalogue of failure by Thames Water, Yorkshire Water and Northumbrian Water”

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.

“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.

“Looking to the future we want transform companies’ performance under our new price control that starts in April next year, so we reduce spills from sewage overflows by 44 per cent by 2030 compared to 2021 levels.”

The proposed findings are the first three cases Ofwat has open in its wider investigation to reach this stage. This investigation is a priority for Ofwat, and it will continue to work as quickly as possible on the eight further cases.

While more detail can be found in the enforcement documents, for the scale of the breaches Ofwat has found, differs between each of the wastewater companies:

• Thames Water - 67% of its wastewater treatment works with flow to full treatment (FTT) permits found to have capacity and operational issues. 16% of its storm overflows associated with its wastewater treatment works were found to be in breach.
• Yorkshire Water - 16% of its wastewater treatment works with FFT permits found to have capacity or operational problems. 45% of its storm overflows associated with its wastewater treatment works were found to be in breach.
• Northumbrian Water - 3% of its wastewater treatment works with FFT permits found to have capacity or operational problems. 9% of its storm overflows associated with its wastewater treatment works were found to be in breach.

The penalties are separate to the commitments that have been set out as part of PR24 draft determinations for all wastewater companies which will see £9.5 billion overall enhancement expenditure for storm overflow improvements to meet their new performance commitment targets.

Ofwat said the water sector is facing unprecedented challenges, with climate change, population growth, urbanisation, and emerging pollutants all putting pressure on the environment across England and Wales.

To help address the challenges, a new Evidence and Performance team has been created within Ofwat to enhance Ofwat’s environmental assessment and monitoring capabilities.

Deadline to submit comments on the consultation proposals is 5:00pm on Tuesday 10th September 2024

Click here to access the comsultation document for Northumbrian Water 

Click here to access the comsultation document for Thames Water

Click here to access the comsultation document for Yorkshire Water