A swathe of water companies have been stopped from using customer money to pay bonuses to bosses this year.
Ofwat said it halted about three-quarters of the total bonuses proposed by firms from being funded by consumer payments, while also disclosing which companies are high on its financial watchlist.
As authorities try to clamp down on the privatised water industry, the PA news agency breaks down what is going on at each firm around the country.
– Thames Water
Thames Water paid £770,000 in bonuses to its chief executive and chief financial officer but Ofwat stopped it from using customer money to fund them.
The struggling London water provider is in £16 billion of debt, and recently warned that it would need rescue funding to survive beyond next year.
Thames is in the process of finalising that deal – in the form of more loans, worth a further £3 billion – to keep it afloat into 2026.
Ofwat put Thames in its most serious “action required” category of financial monitoring, and singled it out for criticism, saying it “urgently needs to address its financial position”.
Nonetheless, it paid out £195.8 million in dividends to shareholders last year, a practice Ofwat said it will halt from Thames this time around.
– Southern Water and South East Water
Southern Water’s top executives got £312,000 in bonuses which were paid by shareholders, not customers. Ofwat said the company did not give a reason that the award “at all was justified”.
And on its company finances, regulators put Southern Water in its “action required” category – one of only three firms, along with Thames and South East Water.
It too, has large amounts of debt – £6 billion of it – which ratings agency Moody’s recently downgraded to “junk” status.
South East Water is also in the most serious category of financial monitoring, as it suffers from “ongoing financial pressures” caused by high spending and more expensive loan repayments.
Those pressures have prompted “concerns” over its financial resilience, said Ofwat.
Despite this, its top executives received £187,000 in bonuses last year. They were partly funded by money from customer bills.
Neither Southern or South West paid out a shareholder dividend last year, and Ofwat said they will not be allowed to this time around without special permission from the regulator.
– Regulators have ‘elevated concern’
Seven companies were placed in the second-most serious category on Ofwat’s financial watchlist, called “elevated concern”.
Among them, Yorkshire Water was stopped from funding its bosses £616,000 in bonuses with customer cash.
The regulator pointed to “risks for financial resilience” partly caused by penalties it imposed earlier this year over Yorkshire Water’s environmental performance.
Wessex Water, meanwhile, has suffered “deterioration” in its finances over the last year, Ofwat said.
Despite this, bosses got £387,000 in bonus and incentive payments – but they were not funded by customers.
Our new powers on bonuses mean that 9 water companies won’t be using customers’ money to fund them.
— Ofwat (@Ofwat) November 21, 2024
This is because we believe these payouts don’t properly reflect company performance last year.
More details: https://t.co/BD9lGsBxZJ pic.twitter.com/pRPiaWgb1M
And SES Water bosses got £386,000 in bonuses, which were funded partly by customers.
Ofwat said it would “closely monitor” the company’s finances after it was bought by listed utilities firm Pennon earlier this year.
Affinity Water, Northumbrian Water and Portsmouth Water all remained on Ofwat’s watchlist for another year also, amid concerns over their finances.
Affinity bosses got £395,000 in bonuses, funded partly with customer money.
Northumbrian got £315,000 and Portsmouth were paid £100,000 in bonuses, both paid for by shareholders.
– The rest
The remaining companies were not flagged for concern on their finances – most of them handed out bonuses to top bosses.
They include Dwr Cymru Welsh Water, which was stopped by the regulator from using customer money to fund £163,000 in bonuses to bosses.
Severn Trent Water handed bosses £2.6 million in bonuses and LTIP (long-term incentive plan) payments, while United Utilities chiefs got £1.4 million. Neither funded the payments with customer cash.
South West Water bosses got £470,000 in incentive pay, while Anglian Water paid its finance chief a £95,000 bonus, also funded by shareholders, not customers.
South Staffs Water gave its chief executive a £49,000 bonus.
