Northumbrian and Ofwat agree a £15.7m enforcement package in lieu of a penalty

Northumbrian Water will fund a £15.7m enforcement package to settle Ofwat’s wastewater investigation. Ofwat found the company – which was under scrutiny as part of a whole sector inquiry – had contravened:

• Regulation 4(4), Regulation 4(2) and Schedule 2 of the Urban Waste Water Treatment (England and Wales) Regulations 1994 (UWWTR), by failing to operate and maintain its wastewater assets adequately, and to upgrade them where necessary, to provide sufficient performance. It also failed to put in place adequate processes and systems to routinely monitor and maintain the capacity and performance of its assets to ensure they were meeting legal requirements.

• Section 94 WIA91 by systemically contravening its UWWTR duties and failing effectually to provide drainage and deal with the contents of its sewers.

• Condition P12 of its licence, which requires it to have in place adequate resources and systems of planning and internal control to carry out its legal obligations, by failing to put in place adequate processes to identify and address emerging and present compliance risks effectively, to ensure that its data gathering and analysis were fit-for-purpose and to ensure that its executive and board received and/or sought sufficient information and assurance on the company’s operational performance.

In August 2024, Ofwat indicated Northumbrian would pay a £17m penalty (5% of relevant turnover) and be subject to an enforcement order which would require it to rectify the problems identified in compliance with legal and regulatory obligations. However, announcing the enforcement package last week, Ofwat reported Northumbrian had provided additional evidence and proposed a redress package and formal undertakings to remedy non-compliance.

It concluded the following enforcement package would provide better value to customers and the environment than a penalty going to Treasury:

• A £2m donation to Northumbrian Water's Branch Out Fund which awards grants up to £10,000 for local projects to improve the natural environment.  

• £2m investment to further reduce spills at specific overflows.  

• A £8.3m investment in the Tyneside Sewer Smart Network through 800 smart sensors, automatic controls and real time decision software to optimise capacity and minimise spills. This aims to reduce spills in the area by 15% and spill volumes by 30%. 

• A £3.4m investment in installation of Flow to Full Treatment monitors at 19 sites.  

• A binding commitment to work with the Environment Agency to ensure that the Whitburn system complies fully with environmental legislation.