Investigation into sewage treatment works

On 18 November 2021 we and the Environment Agency announced investigations into all water and wastewater companies in England and Wales. This was after several water companies explained that they might not be treating as much sewage at their wastewater treatment works as they should be, and that this could be resulting in sewage discharges into the environment at times when this should not be happening.

Find out why Ofwat is investigating, what, how, and by when.

During the course of the investigation we have published a number of updates, which are available here.

Latest update and next steps – December 2023

Within this overarching investigation, we currently have enforcement cases against six companies.

We have now reached the next stage in our enforcement cases into companies’ management of their sewage treatment works and wider networks. We have notified Northumbrian Water, Thames Water and Yorkshire Water of our provisional findings in light of the evidence we have to date.

The companies will now have the opportunity to respond to our provisional findings, and to provide us with any further relevant evidence for our consideration. If we find a company has breached an obligation that Ofwat is responsible for enforcing, we have a duty, subject to certain exceptions, to issue an enforcement order to require the company to take steps to secure its compliance, unless we are satisfied that one of the exceptions to that duty apply.

This is an important stage of our investigation. It will ensure that we have provided the companies with the opportunity to respond to the provisional findings and that any future decisions in the case take account of their representations and any further evidence they might provide. Accordingly, we will consider any representations the companies make in reaching our final proposed decisions. We will then publish our proposed decisions for public consultation. Subject to due process, we expect to be able to do this in the first quarter of 2024. We will take public consultation responses into account as part of our final decisions on each of the cases.

As this investigation is ongoing, we cannot comment further on the detail of these cases for risk of prejudicing the investigation.

We are also continuing to progress the further three current wastewater enforcement cases opened as part of this overarching investigation; and are monitoring the remaining wastewater companies, that are not currently the subject of an enforcement case. As previously set out, the focus and scope of our enforcement cases may change as new information arises. We will continue to provide further updates as appropriate.

If Ofwat ultimately makes a finding of breach sufficient to warrant a fine, as part of its enforcement powers, Ofwat can impose a financial penalty on companies, the value of which can be up to 10% of relevant turnover. Where appropriate, Ofwat may decide not to issue an enforcement order, or decide to impose a reduced or no financial penalty at the conclusion of an investigation, where a company has come forward to formally commit to taking appropriate measures to secure its compliance and to provide suitable redress for its failures.

A reminder of where our investigation started

One of the central issues in Ofwat’s investigation is whether companies meet particular requirements placed on them through The Urban Waste Water Treatment (England and Wales) Regulations 1994 (“the Regulations”). These regulations require companies to build and operate their wastewater treatment works so that they can treat the flows of wastewater that they would typically receive from their local area in all normal local weather conditions, limit pollution from storm overflows and minimise the negative impacts of any discharges of wastewater on the environment. These requirements were put in place to ensure that discharges of untreated storm sewage from treatment works are not commonplace, but only occur, for example, in unusual circumstances, such as a result of unusually heavy rainfall.

The Environment Agency has driven a multi-million-pound-programme requiring water companies to improve how they monitor and manage flows at their wastewater treatment works. Through our price review process Ofwat has enabled water companies to fund this increased monitoring and companies are part way through delivering this investment. These monitors are gathering more standardised information about the volumes of flows of wastewater that are being treated at wastewater treatment works (the “flow to full treatment” level – FFT).

We originally opened our investigation when the rollout of these monitors caused several companies to indicate that at least some wastewater treatment works were not treating the appropriate amount of wastewater, with this resulting in untreated sewage flows being released into the environment at times when this should not be happening.

As part of our investigation, we have therefore gathered focused information from companies about how they manage FFT levels at their wastewater treatment works. This has enabled us to understand the frequency and likely causes of treatment works failing to meet the required FFT level before they discharge untreated flows, either into storm tanks and/or to the environment. This may be due to all or part of a treatment works having insufficient capacity, or it may be due to it not being operated correctly. For example, a treatment works will not be able to treat the levels of flow it was designed and built to treat if the works has not been set up correctly or has not been appropriately maintained.

How the focus of our investigation has progressed

Meeting its FFT level is one of several possible indicators of how a treatment works manages flows of sewage in order to protect the environment in normal local weather conditions. Other indicators could, for example, include volumes of flows entering the works on dry days which exceed the capacity for which the works was designed, the capacity of storm tanks at treatments works (where present), and the number and duration of discharges of untreated sewage being released from the works.

The initial evidence we obtained on companies’ FFT performance revealed broader concerns about how companies managed other aspects of their compliance. This prompted us to gather a wider set of information from companies to continue to build our understanding of how they build, operate and maintain their wastewater treatment works, and in some cases their wider sewerage networks, and whether this is sufficient to treat the flows coming into them in normal local weather conditions, limit pollution from storm overflows, and minimise negative environmental impacts.

Why this matters for companies’ legal obligations

This further information enables us to assess how companies are meeting their legal obligations under the Regulations to:

  • Design and build their wastewater treatment works in order to treat the flows coming to them in normal local weather conditions, limit pollution from storm overflows, and minimise negative effects on the environment from discharges from the works, for instance looking at whether they have sufficient capacity to meet these requirements; and
  • Operate and maintain their wastewater treatment works in order to treat the flows coming to them in normal local weather conditions, limit pollution from storm overflows, and minimise negative effects on the environment from discharges from the works, for instance considering when they divert flows from treatment to storm tanks and why.

It is also important for us in establishing how effectively companies have worked and continue to work to ensure that they meet their legal obligations on an on-going basis, taking account of changes that might take place in their local area that could affect the flows of wastewater coming to a treatment works in normal local weather conditions.

This includes considering how companies use the data available to them (including, but not limited to, spills data from their new monitors) to spot and swiftly investigate where their compliance with the Regulations might be at risk. For example, it could reasonably be expected that, as a minimum, events such as a treatment works discharging on a dry day, recording a serious pollution incident, having frequent spills events, and/or discharges lasting multiple hours, would prompt a company to explore root causes and implement a suitable, cost-effective solution to minimise environmental harm where this is identified.

Our investigation has also gathered information on how companies’ senior management and Boards have sought and considered information to seek assurance that their wastewater treatment works, and wider sewerage networks, are built and operating appropriately, so that they can be confident that their company is meeting its legal obligations. These are all things we would expect companies to be doing. Where senior management and Boards are not seeking assurance on these matters in a meaningful way, our investigations are likely to find companies in breach of their legal obligations. Water companies’ licence conditions require them to have in place adequate systems of planning and internal control to carry out their regulated activities.

Companies ensuring their compliance with the Regulations

The Environment Agency is currently conducting its largest ever criminal investigation to assess whether there has been widespread and serious non-compliance of environmental permits at wastewater treatment works. All water and sewerage companies operating in England are under investigation by the Environment Agency. Likewise, Ofwat is investigating all water and wastewater companies in England and Wales. We currently have six enforcement cases open under this investigation. We continue to monitor the remaining companies and the focus of our enforcement activities may change as new information arise. In parallel. Natural Resources Wales is also working closely with companies in Wales to ensure their compliance with the obligations it enforces.

For the avoidance of doubt, companies should be aware of, and understand, the operation of all of their assets. Any assets discharging to the environment must have a permit from the Environment Agency or Natural Resources Wales to legally do so.

Where a company identifies that a wastewater treatment works, or another aspect of their sewerage network (such as pumping stations or network storm overflows), is no longer built or operating sufficiently to meet their obligations under the Regulations, solutions might include maintenance and operational improvements; steps to increase the capacity of the infrastructure; and/or measures to reduce the flows coming into the network and/or treatment works.

Progressing these solutions will involve the company proactively engaging with the Environment Agency or Natural Resources Wales to ensure both the company’s assets and their environmental permit requirements are, and remain, consistent with the company’s obligations under the Regulations. All wastewater companies should reflect on their practices for identifying and resolving such issues and adapt them where needed, to ensure they can demonstrate their compliance with their regulatory obligations to protect the environment.

Such steps are an important contribution towards ensuring a company’s compliance with the Regulations across their networks. They are also consistent with the expectations set out in Ofwat’s methodology for the PR24 price review and the UK Government’s Storm Overflow Reduction Plan that water companies should be reducing storm overflow spills and their harm to the environment.