Thames Water allowed 35 per cent bill hike but faces £18m fine over dividend payouts
Embattled Thames Water will face an £18m fine from Ofwat after breaking new rules on dividend payments, even as it is allowed to hike bills by 35 per cent by 2030.
The industry regulator ruled this morning average annual bills would rise to £588 by 2030, up from the current level of £436, as part of its much-anticipated Final Determination.
That is significantly below the 59 per cent hike Thames Water had been shooting for, as the UK’s largest water company battles to stave off bankruptcy.
Ofwat also announced on Thursday it would use new powers to fine the crisis-hit utility £18m for two dividend payments it made in the last year and a half.
It marks the first time the regulator has used the powers, which allow it to take enforcement action against water companies which don’t link dividend payments to performance.
Ofwat chief executive, David Black, said the penalty was 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 regulator said it had provisionally found two dividend payments in October 2023 and March 2024 had led Thames Water to breach its new obligations, which came into effect in May 2023.
Ofwat added it also planned to ensure customers did not lose out as a result of the company surrendering £131.3m of its tax losses as part of the March dividend payment, through an adjustment to the price control.
Thames Water, which is responsible for serving around 16m people in London and the South East, is currently looking for a £3bn loan from creditors.
In a statement on the London Stock Exchange, Thames Water said: “The deliverability and investibility of Thames Water’s Final Determination is critical to the company’s future and its ability to deliver improvements for customers and the environment.
“Given its importance and complexity, Thames Water will take time to review the determination in detail before making its response. T
“The company will set out by early February the charges for customers that will apply from April 2025. These charges will reflect Ofwat’s Final Determination, and Thames Water remains committed to supporting those customers who need help with their bills.”