Anglian Water is facing paying out £62.8m after an investigation by the industry regulator found a “serious breach” in how the company managed its sewage works.
Ofwat has proposed a number of improvements Anglian Water must make to its wastewater treatment works and network after discovering “excessive spills from storm overflows”.
The firm could have been fined £57.1m but Ofwat said Anglian Water had acknowledged its failures and agreed to fund investments.
Anglian – which is one of six water firms banned from paying its chief executive a bonus for last year – said: “We understand the need to rebuild trust with customers and that aspects of our performance need to improve to do that.”
Lynn Parker, Ofwat’s senior director for enforcement, said: “Our investigation has found failures in how Anglian Water has operated and maintained its sewage works and networks, which has resulted in excessive spills from storm overflows.
“This is a serious breach and is unacceptable.”
Ofwat said Anglian would invest £57m to improve wastewater flows in its region and also pay £5.8m into a fund to support projects aimed at providing environmental and social benefits for local communities.
Mark Thurston, who took over as Anglian’s chief executive in July last year from Peter Simpson, said: “It will take time and investment to achieve a significant reduction in spills, but we are making good progress.”
He said the company has allocated £1bn to fund measures aimed at halving the number of spills by 2030.
By that time, the average annual household water and waste bill for an Anglian customers will rise to £631, compared to an average £491 last year.
A recent report by the Independent Water Commission noted that water companies were hiking bills following years of underinvestment.
Firms have claimed that they have been held back from investing in the country’s pipes and sewage treatment facilities because Ofwat limited price increases for customers.
Last year, Ofwat – which the report recommended to be scrapped and rolled into a single regulator – announced that water bills in England and Wales would increase sharply over five years to raise £104bn to invest in infrastructure.
However, since being privatised in 1989, water companies have been criticised for paying out billions of pounds to shareholders, including to overseas investment funds.
Anglian Water is owned by a company that is registered in Jersey. Its biggest shareholders are based in Canada, Australia and Abu Dhabi.
