Water bills to hit £597 a year, says Ofwat
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Thames Water faces yet another fine after the troubled supplier was found to have flouted new industry rules when it handed £170m to shareholders. The fine was issued as regulators gave the troubled supplier the all-clear to hike bills by 35pc. The company paid two dividends worth £37.5m and £131.3m in October 2023 and March 2024 respectively, despite a crackdown which forbids such payments if they are unjustified.
On Thursday, Ofwat said the company’s board had not even properly considered the rules before the first payment because its dividend policy was out of date. It also found the second payment was wrong because Thames had “surrendered” tax advantages to its owner, Kemble Water Group, without receiving any benefit in return.
The company’s breach of the dividend rules was “sufficiently serious” that it should pay an £18m penalty, Ofwat said. Ofwat’s chief executive David Black said: “Ofwat’s £18m penalty and clawing back the value of £131m in unjustified dividend payments is a clear warning to the whole sector: We will take action against companies who take money out of these businesses, where performance does not merit it.”.
The utility provider, which is Britain’s biggest water supplier, has also been told that it will be allowed to raise customer bills by far less than it sought to. Ofwat said this was partly because of the dividend breaches, which the regulator said it would seek to reverse by granting Thames’ investors smaller returns over the next five-year bills period.
