Ofwat has proposed accepting a £280,000 enforcement package following its finding that Hafren Dyfrdwy, sister company of Severn Trent Water, has breached its legal obligations in the operation of its wastewater treatment works and network.

Ofwat's investigation found that the company breached its obligations, failing to effectually provide drainage and deal with the contents of its sewers. The company was also found to have historically breached requirements of its licence to have in place adequate processes and systems to meet those obligations. While it now has the right processes in place, the company is required to rectify all outstanding issues and ensure future compliance with regard to these obligations.

In acknowledging these breaches, Hafren Dyfrdwy has agreed to take the steps necessary to address the problems identified and has proposed a redress package of £280,000, which would need to be delivered between now and 2030. The costs would be paid for by the company and its shareholders, and not through higher customer bills.

The package includes the installation of two storm water balancing tanks at Llansantffraid Sewage Pumping Station to reduce spills, and a community-based offering with the company working with the Llanfyllin Dolydd Building Preservation Trust to support creation of a wetland habitat on the Llanfyllin Workhouse. This is expected to be completed by 2030.

Lynn Parker, Senior Director for Enforcement at Ofwat, said:

"Our investigation found unacceptable breaches by Hafren Dyfrdwy, which have resulted in excessive spills from storm overflows. We are clear this is unacceptable and now expect the company to focus on putting things right so that customers can regain trust in their water company and the critical service they provide.

“We understand that the public wants to see transformative change. That is why we are prioritising this sector-wide investigation, which is holding companies, like Hafren Dyfrdwy, to account. To date, Ofwat has concluded eight cases in the investigation, resulting in more than £300m in enforcement packages and penalties.”

This enforcement package is in addition to the company rectifying any identified breaches so that it has processes in place to ensure future compliance.

Ofwat has launched a public consultation on the proposed package before its final decision is made and published. Deadline to submit responses to the consultation is 5pm on 6 November.

Ofwat can impose financial penalties of up to 10% of a company's relevant turnover. In deciding whether to impose a penalty and the level of that penalty, Ofwat will take account of the particular facts and circumstances of the case under consideration to establish the appropriate level of penalty to impose.

The water sector regulator said that had the proposed enforcement package not been brought forward, a penalty would have been applied where the money would have been returned to HM Treasury.

The £280,000 enforcement package Ofwat has secured is greater than if a penalty had otherwise been imposed on the company (which would have been £255,000, 3.5% of Hafren Dyfrdwy’s annual turnover).

Ofwat’s initial enquiries of the company in 2021 and 2022 were about its performance in relation to its flow to full treatment (FFT) permit requirements and what this indicated about the way the company designs, operates, maintains and monitors its WWTW to be compliant with its obligations, and to take remedial action where necessary.

Hafren Dyfrdwy has resolved the compliance issues with Condition P of its licence relating to having adequate resources and systems of planning and internal control (including oversight by senior management and the Board) to ensure assets are performing adequately.

Hafren Dyfrdwy and sister company Severn Trent are owned by Severn Trent PLC. In its February 2025 response to Ofwat it told the regulator that as a distinct regulated entity within the Severn Trent Plc Group, its Board operates as such, with its own, tailored governance arrangements and schedule of matters reserved to its Board. As a subsidiary of a FTSE100 listed company, the company said it also benefits from the highest standard of corporate governance.

Click here to download the consultation document.