Thames Water has been fined £18.2 million for paying out dividends to its parent company in breach of its licence conditions.
Issued alongside its final price determination for the next five years, Ofwat said the penalty would have been harsher but for the debt-laden water utility being in ‘cash lock-up’ situation.
This means it is being overseen by Ofwat, which can ensure that any dividends paid comply with the requirements of Licence Condition P30, said the regulator.
Ofwat added that normally it would have levied a fine of 1% of Thames’s turnover, but given it was a first offence this was reduced to 0.75%.
The regulator said it did not consider the offence sufficient to warrant an enforcement action.
Thames was today told it will allowed to increase prices by 35% over the next five years to 2029- 30 or an extra £152 per customer.
This is well short of what London's water supplier was asking and also what a group of bondholders that recently provided it with a £3 billion emergency loan were demanding.
Ofwat’s confirmed the increase will see bills average £588 annually, against £436 previously.