Britain’s largest water provider, Thames Water, has been fined nearly £123 million ($166 million) for repeatedly releasing sewage into rivers and streams while continuing to pay dividends to shareholders, the UK’s water regulator announced on Wednesday.
Ofwat, the official watchdog for the water industry, described the fine as the largest it has ever imposed. The penalty includes £104.5 million for environmental failures and an additional £18.2 million for breaching dividend payment rules.
Regulator: Infrastructure Neglected While Dividends Were Paid
Thames Water, which serves around 16 million people in London and the surrounding region, was found to have failed in its core duty to maintain and operate essential water infrastructure. Ofwat said the company neglected its responsibilities while rewarding investors with “undeserved dividends.”
“This penalty sends a clear message that companies must prioritize public and environmental interests over shareholder profits,” the regulator stated.
Government Says Customers Won’t Bear the Cost
In response to public concerns, the UK government emphasized that the fine will be paid by Thames Water and its investors—not by customers.
The announcement comes amid mounting public anger over sewage spills that have polluted rivers, lakes, and coastal areas. Thames Water, along with other water companies, is also under pressure for planning to raise customer fees to fund urgent infrastructure upgrades. These updates are deemed necessary to handle growing environmental stress from climate change and population growth.
Company Facing Debt Crisis and Possible Sale
Thames Water is in deep financial trouble, with debts approaching £19 billion. In March, it received court approval to raise £3 billion in emergency funds to prevent entering special administration—a form of government-controlled bankruptcy.
Amid ongoing financial uncertainty, the company is reportedly seeking a potential buyer. US investment firm KKR has emerged as a possible suitor.
Criticism Over Dividends and Executive Pay
Both politicians and consumer advocates have strongly criticized Thames Water for prioritizing investor returns and executive pay over essential infrastructure investment. Critics argue the company failed to reinvest adequately in its network of pipes, pumps, and reservoirs, contributing to environmental damage and service failures.
Thames Water’s leadership, however, has defended its actions. Executives argue that long-term regulatory decisions—specifically, keeping water prices too low—left the company with insufficient funds to invest in modern infrastructure.
Thames Water: “We Take Environmental Responsibility Seriously”
In a statement issued following the fine, Thames Water acknowledged the regulator’s findings but claimed it is already taking steps to improve.
“We take our responsibilities to the environment very seriously,” the company said. “Ofwat has acknowledged that we have made progress in addressing the issues raised during its investigation into stormwater overflows.”
Regarding the dividend payments at the heart of the fine, the company insisted they were lawful: “The dividend was announced with due regard to the company’s legal and regulatory obligations.”
Thames Water also assured stakeholders that it still has financial support from lenders and is continuing efforts to raise new equity to stabilize its finances.
