Thames Water has agreed to pay £24.5 million of its record £122.7 million fine by the end of September under a payment plan with regulator Ofwat. The troubled water company will pay a fifth of the penalties as an initial instalment, with the remaining 80% dependent on securing rescue financing or entering special administration.
The payment plan provides breathing room for Britain's biggest water supplier as it teeters on the brink of potential temporary nationalisation. Thames Water requested the extended timeline due to its severe financial difficulties, with the original deadline of August 20 now pushed back.
Payment conditions tied to rescue deal
Ofwat said the remainder will be paid either 30 days after Thames Water secures rescue financing with adequate cash liquidity, or 30 days after exiting any government-imposed insolvency process. The regulator has set a final "backstop date" of March 31, 2030 for all remaining penalties.
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." She emphasised the focus remains on ensuring operational improvements and financial resilience for customers.
Record fine for infrastructure failures
The penalties represent the largest fine ever imposed on a UK water company, according to the Express. Ofwat announced the fines in May after finding "a series of failures by the company to build, maintain and operate adequate infrastructure" at sewage treatment works.
Thames Water was ordered to pay £104.5 million for sewage treatment failures, plus £18.2 million for breaking dividend payment rules. Ofwat pointed to nearly £170 million in dividend payments in October 2023 and March 2024 that were deemed unjustified.
Company fights to avoid nationalisation
The Government has appointed insolvency specialists FTI Consulting to step up contingency planning in case the supplier collapses into special administration. Thames Water, which serves 16 million customers, remains in talks with senior creditors over rescue funding but recently raised doubts about completing the restructuring.
City A.M reports the company is "at the centre of a public backlash against the water sector" as it faces mounting pressure from investors and environmental groups. Thames Water insists it "continues to work closely with stakeholders to secure a market-led recapitalisation which delivers for customers and the environment as soon as practicable."
The company has confirmed that fines will not be paid from customer bills, providing some protection for households amid the ongoing financial turmoil.
Sources used: "PA Media", "City A.M", "Express" Note: This article has been edited with the help of Artificial Intelligence.
