Regulator investigates Thames Water over delayed environmental schemes

Thames Water is being investigated by the water regulator for England and Wales, Ofwat, after it delayed environmental improvement schemes.

The investigation comes after the Guardian revealed that the UK’s largest water company intentionally diverted millions of pounds pledged for environmental clean-ups towards other costs, including bonuses and dividends.

Ofwat has opened an enforcement case into the company to decide whether it has breached its obligations in failing to deliver 100 out of 812 schemes it was supposed to put in place between 2020 and 2025.

These environmental measures are part of the Water Industry National Environmental Programme (WINEP) and they include protecting and enhancing rivers, upgrading sewage systems to reduce spills, reducing the amount of water abstracted from rivers and improving the safety and quality of designated bathing sites.

Water companies have to deliver these on time as part of their statutory requirements with the regulator; failing to do so means enforcement action can be taken including fines. The WINEP deal is a condition for water companies being able to increase bills.

Lynn Parker, the senior director for enforcement at Ofwat, said: “Customers have paid for Thames Water to carry out these essential environmental schemes. We take any indication that water companies are not meeting their legal obligations very seriously. Therefore, we have launched an investigation to understand whether the delayed delivery of environmental schemes means that Thames Water has breached its obligations. If we find reason to act, we will use our full range of powers to hold Thames to account for any failures and will require them to put things right.”

Consumer groups are concerned the failure to deliver environmental schemes, which are supposed to be paid for with funds from water bills, means that people in the Thames area will have to pay twice.

Thames has been mired in problems for months. The company faces serious financial issues and is heavily indebted, with speculation rife over whether it can survive in its current form or whether it may eventually have to be renationalised.

Matthew Topham, the lead campaigner at We Own It, said: “To protect the interests of shareholder and creditors, the board have put the safety of Londoners and Thames Valley residents, and our environment, at risk. It’s official privatised water can only continue to function by cheating the public.

“We should not have to pay again for infrastructure we have already paid for. Ofwat must cancel its bill rise at Thames and ask ministers to bring the firm into public ownership so it works for people, not profit.”

Thames Water denied anyone will have to pay twice and said that the company remains committed to its environmental pledges. In its response to the Guardian’s report in December, Thames said sharp increases in its costs such as energy and chemicals – which it claims went beyond standard measures of inflation – lay behind its decisions to delay the works.

A Thames Water spokesperson said: “We note Ofwat’s decision to open an enforcement case into the delayed delivery of WINEP7 and will cooperate fully. Customers will not pay twice for investment that has already been funded through customer bills. We’ve been very open about the challenges of delivering all the elements of our WINEP 7 programme, which has been impacted by cost increases that are higher than the inflation index applied to our allowances. We informed Ofwat of this in August 2023. We remain committed to delivering all our WINEP commitments.”