Ofwat to hit South East Water with £22m fine for outages

(by Verity Mitchell)

Ofwat has proposed a £22m fine for South East Water following an investigation into multiple supply disruptions between 2020 and 2023. This represents 8% of the company’s turnover.

The investigation found that the company failed to plan sufficiently, learn from incidents and conduct root cause analysis to maintain resilience within its water supply system, and was therefore unable to cope during periods of high demand or extreme weather. Furthermore, the company failed to maintain key infrastructure such as service reservoirs, boreholes and major pipes. The disruptions from these failings meant customers had no tap water.

Ofwat’s investigation also found that the company’s response was slow and disorganised, with shortages of bottled water and not enough tankers or support for vulnerable customers. South East Water had failed to learn lessons from previous incidents.

Ofwat said: “South East Water has not taken ownership of these issues and as a result, supply interruptions are still happening too often. Our proposed enforcement order sets out the steps we expect the company to take, including senior management responsibility to fix the problems to prevent them from happening again.” 

Ofwat is consulting until 13 April on the fine and enforcement order. This fine doesn’t take into account the most recent water supply shortages from the failure of the Pembury water treatment plant in November 2025 and further disruption early this year.

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Court refuses to block publication (by Karma Loveday)

South East Water attempted to block Ofwat from this course of action. It filed a claim for judicial review, challenging the regulator’s decisions to propose an enforcement order and financial penalty and to publish notice of its proposals. It also applied for an interim injunction to prevent publication of the proposals pending determination of the claim.

The company cited “compelling reasons” including that the decision was predetermined, legally flawed, and could have perilous financial consequences. These included a potential credit rating downgrade which would see South East Water fall below investment grade, thereby increasing the difficulty and cost of raising new finance, and threatening existing finance from investors who require an investment grade rating. According to the court record, South East Water warned these factors “are also likely to compound one another, with a serious risk that they create a ‘doom spiral’ from which South East Water is unable to extract itself.”

However, at the hearing on 2 March, Mr Justice Chamberlain refused to restrain Ofwat from publishing its proposed decisions. South East said it would not appeal, and the regulator went ahead.