Fri, 16 May 2025

Fri, 16 May 2025 Thames Water bonuses could be blocked by regulator

New rules mean Ofwat could step in to prevent under-performing water companies paying any bonuses.
New rules set to come into effect next month could block water companies, including Thames Water, from paying bonuses under certain conditions. The Environment Secretary has announced that the regulator Ofwat will now be able to ban bonuses if companies fail to meet environmental and financial standards. This means that even if companies use funds from shareholders or lenders to pay bonuses, they may still not be allowed to do so. Thames Water, which has been criticized for its poor performance in recent years, claims it is not paying performance-related bonuses but instead "retention payments", which are not covered by the new rules. However, these retention payments will not be funded by customers, according to the company. The new powers given to Ofwat allow them to ban "undeserved bonuses" and also enable them to claw back bonuses paid in previous years if companies fail to meet standards. The Department for Environment, Food and Rural Affairs (Defra) has stated that customers should not have to pay for water company mismanagement, and that firms will be judged on four key measures: environmental performance, consumer matters, financial resilience, and criminal liability. The government's move is aimed at preventing water companies from profiting from poor performance. Defra Secretary Steve Reed said: "The days of profiting from failure are over."
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