Thames Water hit with £39m of penalties after lacking regulatory targets

Thames Water was hit with penalties of almost £39m final 12 months after lacking a string of environmental targets and mentioned its tumultuous company governance had broken its repute.

The debt-laden firm – which was this week put into special measures by the regulator, Ofwat – missed 21 regulatory targets final monetary 12 months in a number of areas, from air pollution incidents to leakage and provide interruptions, a report mentioned.

Thames, which serves 16 million prospects throughout London and the Thames valley, was hit with a £12m penalty after coming backside amongst 17 firms ranked for customer support.

It mentioned halting model campaigns to give attention to its turnaround had hit its scores, and “buyer notion has additionally been influenced by damaging media publicity this 12 months, together with the resignation of our CEO, firm debt, operational points, and air pollution fines”.

The penalties emerged within the firm’s annual efficiency report, which was belatedly launched late on Wednesday night time. The doc was revealed a day after Thames Water warned that it will run out of cash by next June with out recent funds, and the night time earlier than Ofwat put it into the unprecedented “turnaround oversight regime”.

Britain’s largest water provider might be put right into a government-handled administration and the majority of its £15.2bn debt mountain added to the general public purse if it can’t increase additional funds to spend money on its ageing belongings.

Though the brand new penalties will put additional pressure on the corporate’s stability sheet, they’re unlikely to play a major half in deciding its future, because it goals to lift £3.25bn in recent fairness.

Ofwat was accused of treating customers with “contempt” because it mentioned invoice payers in England and Wales must pay an extra £94 on average over five years as water firms try to repair sewage spills and leaks which have angered politicians and campaigners.

The regulator penalises and rewards English and Welsh water firms based mostly on their efficiency towards a number of targets over a 12 months.

Thames’s largest penalty was £16.3m for water provide interruptions, brought on partly by an outage in Guildford – blamed on Storm Ciarán – which left 1000’s in Surrey with out water final 12 months. “The climate has as soon as once more uncovered the fragility of our belongings,” Thames mentioned in its report.

The corporate was hit with a £14m penalty for lacking leakage targets, blamed partly on chilly snaps in December and January; £12m for increasing pollution incidents; and £7m for poor efficiency in inner sewer flooding.

Total, the £38.6m in whole internet penalties was down on £82.3m the 12 months earlier than, however above the £35m in 2021-22. Thames acquired monetary rewards for progress in renewable power manufacturing and decreasing sewer collapses.

Thames Water’s chief government, Chris Weston, who joined the enterprise in January, mentioned its staff “stay centered on the supply of our three-year turnaround plan”.

The corporate hopes to keep away from nationalisation by elevating cash within the personal markets. In its report, the chair, Sir Adrian Montague, mentioned: “With the correct workforce, time, cash and sources, Chris and I each imagine we are able to flip this enterprise round – it will be in the very best curiosity of consumers and the atmosphere for Thames Water to stay market-led.”

The brand new penalties come towards the backdrop of a strained relationship between Ofwat and Thames. The regulator revealed on Thursday that members of the corporate’s board didn’t assist parts of its personal five-year marketing strategy and referred to as the prices “poorly justified”.

Thames Water additionally mentioned it needed to halt a £70m “inexperienced financial restoration” (GER) programme, agreed throughout the pandemic. The programme was designed to speed up the rollout of good meters, and the allowance was contingent on the corporate hitting leakage targets. Nonetheless, it blamed a drought and “freeze-thaw occasions” for lacking the targets.

Ofwat rejected a request to change the targets. Thames mentioned that call meant “we have been left with no various however to cease the GER programme”, and acknowledged that it will be a “disappointment” for patrons.

The Guardian revealed final 12 months that Thames had failed to put in a single good meter within the Thames valley below the programme, which was purported to ship 204,700 of the units.