Government supports new Ofwat powers to tackle water company dividends

20 Mar 2023 01:02 PM

New powers made possible through the Environment Act will enable Ofwat to clamp down on excessive cash pay-outs and hold water companies to account.

The government has today (20 March) backed new plans for the water regulator Ofwat to take action against water companies that pay out dividends to their shareholders despite failing to meet the required performance standards.

The changes have been made possible by the government’s Environment Act 2021 which gave Ofwat new powers to change water company licences without consent from water companies.

As such, Ofwat is now modifying licences to require companies to:

If a company falls short, Ofwat will be able to take enforcement action.

These changes will improve the environmental performance and financial health of water companies, as well as providing greater transparency with customers and stakeholders.

Water Minister Rebecca Pow said:

It is wrong for water companies to be responsible for environmental damage and poor performance but not face the penalties. It has been happening too often and it needs to stop.

These new powers, made possible through our Environment Act, will enable Ofwat to clamp down on excessive cash pay-outs and make sure companies put customers first. This will apply when a company is not meeting expectations on performance or is facing questions over its financial resilience – and ultimately means we go further in holding water companies to account.

The government has taken further action in recent years to hold water companies to account for pollution, including:

The majority of licence changes will be implemented eight weeks after publication – by 17 May 2023.