Thames Water has been hit with a £56.8 million fine after failing to hit key targets relating to pollution, leaks and supply interruption.

The firm, which manages wastewater for Watford and most of Hertfordshire, was handed the biggest fine of all water companies for the fourth straight year.

However, a spokesperson flagged how it has between three and four times more customers than other companies so penalty rates are proportionately higher.

Its waste treatment facilities have been responsible for multiple overflows near the town this year, including over 800 hours of wastewater released into the River Chess and 50 into the River Colne.

But its category was raised from “lagging” to “average” as it met some performance targets on leakage and supply interruptions.

The Thames Water spokesperson said: “We are pleased that Ofwat has recognised the improvements we’ve made by upgrading our rating.  This shows our turnaround plan is having a positive impact. We have achieved the largest reduction in financial penalties across the industry and are one of only three companies to improve their ODI performance over the year."

In an annual performance report on water firms, Ofwat said customer bills will be slashed in 2025-26 to reflect the penalties, with the total rebates calculated in December.

Its chief executive David Black said: “This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.

“It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings.

“Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the government or regulators tell them to act."

The government has welcomed the announcement, with Environment Secretary Steve Reed saying: “The public deserves better. That’s why we are placing water companies under special measures through the Water Bill, which will strengthen regulation including new powers to ban the payment of bonuses for polluting water bosses and bring criminal charges against persistent law breakers."

“We will be carrying out a full review of the water sector to shape further legislation that will fundamentally transform how our entire water system works and clean up our rivers, lakes and seas for good.”

The Thames Water spokesperson said: “While our performance penalty value is among the highest in the sector, this reflects that Thames Water has three to four times more customers than other water companies, so our penalty rates are set proportionally higher. The ODI penalty per household ranks Thames as an average performer in the industry.

"We recognise the work that remains to keep improving and get our performance where it needs to be. That’s why we have proposed an ambitious business plan for 2025-2030 to allow us to make the vital investment required in the next regulatory period."

They continued: "If Ofwat approves our plan, we will be able to keep our performance on its improved trajectory and deliver more for our customers and the environment.” 

Three other water firms have also been fined by Ofwat, with Anglian Water paying £38.1m, Yorkshire Water fined £35m and Southern Water hit with a £31.9m penalty.