Thames Water has been fined £122.7m for breaching of rules relating to its sewage operations and shareholder payouts.
It is the biggest ever penalty issued by the water regulator Ofwat.
The regulator said the fines followed its “biggest and most complex investigation” and confirmed it would be paid by the company and its investors, not by customers.
A Thames Water spokesperson said: “We take our responsibility towards the environment very seriously.”
The fine issued by the water industry watchdog has ordered Thames Water to pay a £104.5m penalty for breaches of rules connected to its sewage operations.
That is on top of an additional penalty of £18.2m for breaches relating to shareholder payouts – known as dividends. It is the first time Ofwat has fined a water company over “undeserved dividends”.
Thames Water is currently in “cash lock up” and no further dividend payments can be paid without approval from Ofwat.
It comes as Thames continues to face heavy criticism over its performance in recent years following a series of sewage discharges and leaks.
The company is also struggling under a huge £20bn debt pile, but secured an emergency £3bn in March to stave off collapse.
The supplier serves about a quarter of the UK’s population, mostly across London and parts of southern England, and employs 8,000 people.
It had expected to run out of cash completely by mid-April before it secured a rescue loan and the government has been on standby to put Thames into special administration.
David Black, the chief executive of Ofwat, said the fines were a result of a “clear-cut case where Thames Water has let down its customers and failed to protect the environment”.
“Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations,” he added.
“The company also failed to come up with an acceptable redress package that would have benefited the environment, so we have imposed a significant financial penalty.”
Releasing raw sewage has the potential to significantly damage the environment and poses a risk to human health for those swimming in a river or sea where sewage is being discharged.
Ofwat proposed the £104m fine in August last year, but confirmed the penalty, and the additional £18.2m fine on Wednesday.
Earlier this month, Thames Water’s boss Chris Weston told MPs the company’s survival depended on Ofwat being lenient over fines and penalties.
A spokesperson for Thames Water said: “We take our responsibility towards the environment very seriously and note that Ofwat acknowledges we have already made progress to address issues raised in the investigation relating to storm overflows.”
“The dividends were declared following a consideration of the company’s legal and regulatory obligations.”
“Our lenders continue to support our liquidity position and our equity raise process continues.”
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