Thames Water has agreed a payment plan with Ofwat over the £122.7m it owes to the water services regulator.

The water company, which serves over 16 million customers in London and the South East, is still seeking outside investment to avoid temporary nationalisation.

In May, Ofwat ordered Thames Water to pay a £104.5m penalty for sewage treatment breaches, the largest single penalty the regulator has ever issued, following an investigation into all UK wastewater companies’ management and maintenance of their sewerage networks.

Ofwat fined Thames Water an additional £18.2m fine for rule breaches relating to dividend payments it made to shareholders, after the regulator said Thames Water’s decision to make the payments did “not properly reflect the company’s delivery performance”.

In a company statement today, Thames Water said it was continuing to work closely with stakeholders to secure a “market-led recapitalisation”, which “delivers for customers and the environment as soon as practicable”.

The fines had originally been due to be paid by 20 August although legislation sets out that a company can apply to Ofwat to request a payment plan for an enforcement penalty it has received.

Amid ongoing uncertainty over the future of Thames Water, Ofwat has considered an application from the company and agreed a payment plan.

The plan will see 20% of the two total penalties paid no later than 30 September, totalling a sum of £24.5m, while the payment of the remaining 80% will take place on the earliest of three possible events.

This could be either 30 calendar days after the implementation of a restructuring of Thames Water’s finances, such that there would be improved cash liquidity in the business, or should the company enter the special administration regime (SAR), then 30 days after its exit from this regime. There is also a backstop date for the penalties of 31 March 2030.

Senior director of enforcement at Ofwat, Lynn Parker, commented: “This payment plan continues to hold Thames Water to account for their failures but also recognises the ongoing equity raise and recapitalisation process.

“Our focus remains on ensuring that the company takes the right steps to deliver a turnaround in its operational performance and strengthen its financial resilience to the benefit of customers.”

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