Water suppliers brace for £2bn sewer fines, latest blow to troubled sector

Water suppliers are bracing for £2bn in fines over the next five years for leaking waste water into rivers and lakes.

Regulator Ofwat is insisting on cracking down on the failings after being slammed for being ineffective while the country’s precious waterways are subject to damaging pollution.

And now ratings agency Moody’s has predicted the crackdown will trigger a series of fines, another blow to an industry struggling to attract new investment.

Moody’s latest report said that if companies act “in accordance with their business plan assumptions”, most would likely incur net penalties worth a combined £2bn over the next five years.

Pollution and incidents that deteriorate the quality of bathing water account for a large proportion of fines, as do supply interruptions and leaks.

The regulator has also decided that household bills could rise by £94 over the next five years. The 16 water suppliers had requested a much larger increase.

Last month, Ofwat promised to introduce “radical change”.

But the warning comes at a time when some of the biggest suppliers are struggling with huge debts.

The country’s largest water supplier, Thames Water, is believed to be on the brink of nationalisation as it only has enough cash to last until May 2025. It has debts of £15.2bn.

In another blow, plans to charge customers £157m to plug a hole in its pension scheme were scuppered yesterday.

The Guardian reported that Ofwat provisionally rejected this idea, saying it was “entirely” the responsibility of bosses and shareholders.

Danni Hewson, head of financial research at brokerage AJ Bell, said: “Finding investors willing to put more money into this ailing utilities sector will become increasingly difficult as price rises are capped and pressure to invest in infrastructure continues to mount.”

Water companies are only allowed to discharge untreated wastewater into rivers in exceptional circumstances, such as after heavy rain.

Wastewater discharges into England’s rivers and seas by water companies more than doubled last year to a total of 3.6 million hours, according to the Environment Agency (EA).

But it is not known how many of the 464,000 stormwater overflow pipe discharges occurred illegally on dry days, The Mail on Sunday reported earlier this month.

To the dismay of local communities and businesses, Lake Windermere (pictured) is one of the severely polluted bodies of water.

United Utilities is accused of dumping millions of litres of sewage into the Lake District beauty spot but has handed out almost £340m to shareholders.

Boss Louise Beardmore said it had been ranked the number one water and sewerage company for customer service in the UK’s independent Customer Service Index.

“We take our role in protecting the environment very seriously and our ambitious business plan would see us invest more than ever before to improve services across the five counties of the North West,” he said.