Ofwat launches investigation following claims water companies broke the law

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Following reports about ‘widespread unpermitted releases of sewage into the environment’ by water and wastewater companies, Ofwat launched an investigation on 18th of November to establish whether companies are complying with their statutory and licence obligations.

According to the water regulator, new information, and analysis by the Environment Agency, suggests that water and wastewater companies may have released sewage into rivers and waterways when they were not legally allowed to do so.

Ofwat’s Interim Chief Executive, David Black, commented on the announcement: “Back in the summer, I wrote to companies setting out the need to improve performance on the use of storm overflows.

“I haven’t seen enough to suggest that message was heard or heeded, and this new information suggests there may have been very serious failings by water companies in treating wastewater.

“We will find out what company Boards knew and when, and if there has been management failure or misreporting of data to us and to the public. If we find there has been, we will use all of our powers to hold companies to account.”

Mr Black has written to water companies to investigate the extent of any non-compliance and why it has happened.

Ofwat has also asked Boards of water companies to explain how environmental performance and compliance with obligations has been taken into account when deciding on paying out dividends and executive bonuses.

While the Environment Agency is investigating potential breaches of environmental law, Ofwat is looking at companies’ compliance with their statutory duty to provide a wastewater treatment system, along with the management and corporate behaviours of water companies.

Ofwat has told companies to:

  • Provide full disclosure on the scale of any illegal releases of sewage,
  • Explain what caused them,
  • Explain how they monitor compliance with their obligations including their system of management and internal controls,
  • Set out what role the Board plays in scrutinising and monitoring these actions,
  • Describe how Boards have approached dividends and remuneration decisions in the context of environmental performance, and
  • Set out companies’ plans and timelines to address and remedy any problems uncovered.

Ofwat’s enforcement powers can see the regulator fine companies up to 10% of their turnover.

A joint announcement between the Environment Agency, Ofwat and Defra is available on the Ofwat website.