Thames Water has been fined nearly £123million after investigations into its wastewater operations and shareholder payouts.
This is the largest penalty water regulator Ofwat has ever issued.
Thames Water and its shareholders will pay the fine rather than customers.
Of the £122.7million fine, £104.5million is for breaching wastewater rules and an additional £18.2million fine for breaching dividend rules.
Thames Water, which keeps taps running for 16million Londoners and Thames Valley residents, was investigated in August.
Water companies can legally dump sewage into rivers and seas in exceptional circumstances, such as during heavy rain.
But campaigners say the sheer amount of waste being spewed is sickening swimmers and polluting the country’s ecosystems.
Thames Water’s wastewater treatment works ‘spill regularly’, Ofwat found. In 2021, 70% of storm overflows spilt sewage at least 20 times, with 30% doing so more than 60 times.
The report said: ‘Thames Water has failed to demonstrate that these spills resulted from exceptional circumstances, or that it would have been excessively costly to address the spills from these storm overflows.’
Ofwat found Thames Water failed to keep an eye on 300 storm overflows, which are designed to ease pressure on the Victorian-era infrastructure.
According to the pollution monitoring charity Surfers Against Sewage, water companies pumped out sewage 1,000 times a day in 2022.
Ofwat chief executive David Black said: ‘This is a clear-cut case where Thames Water has let down its customers and failed to protect the environment.
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‘Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations.’
Black stressed that dividends must be ‘linked to performance for customers and the environment’, rather than pumping portfolios.
He added: ‘We will protect customers from water companies that seek to take money out of their businesses, where their performance does not merit it.’
Environment Secretary Steve Reed said: ‘The era of profiting from failure is over. The Government is cleaning up our rivers, lakes and seas for good.’
Timeline of Thames Water financial woes
July 2023 – Shareholders agree to provide £750million in funding
September 2023 – Thames Water is ordered by Ofwat to refund customers £101 million for poor performance
October 2023 – Thames Water is named as one of the worst-performing water companies
January 2024 – Chris Weston took up post as chief executive and was paid an annual salary of £850,000, on top of a 156% bonus so he got £2.25million
March 2024 – Investors announced they would withhold the first payment of a £4bn turnaround plan unless Ofwat agreed to an increase in customer bills, saying that without it the plan is ‘uninvestible’
April 2024 – Whitehall consideration of plans to renationalise Thames Water, with the state taking on most of its £15.6bn debt and lenders losing up to 40% of their money
July 11, 2024 – Ofwat put Thames Water into special measures, with a ‘turnaround oversight regime’ subject to ‘heightened regulatory’ scrutiny
August 2024 – Thames Water warned its continued survival required it to increase water bills by 59% over five years, rejecting the £19/year cap proposed by Ofwat
October 2024 – Thames Water proposed a deal to raise a loan of up to £3bn that would enable it to survive until October 2025, while increasing the company’s debt to £17.9bn by March 2025
December 2024 – Thames Water fined £18.2m by Ofwat after breaching dividend rules on payments made in 2023 and 2024
February 18, 2025 – High Court approval for an emergency debt package worth up to £3bn for Thames Water.
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