Regulator proposes £22m penalty for ‘consistently underperforming’ South East Water

THE UK water regulator Ofwat has proposed a £22.46m (US$29.9m) fine for South East Water (SEW) over failures that led to five major supply outages between 2020 and 2023. 

The figure suggested by Ofwat amounts to 8% of SEW’s turnover. Ofwat can issue fines of up to 10% of turnover. 

Ofwat has opened a public consultation on the proposed fine and other improvements to SEW infrastructure included in the draft enforcement notice. The consultation will run until 13 April. SEW had sought an injunction to prevent Ofwat publishing its proposed fine and enforcement action but their application was rejected by the High Court earlier this week. The company has applied for a judicial review of Ofwat’s proposals. 

The action follows investigations into five supply outages between 2020 and 2023, which Ofwat largely blamed on inadequate asset maintenance. The five left a total of 286,000 customers without running water for extended periods. All five occurred either in cold winter periods, when freeze–thaw cycles caused pipe leaks, or during dry summer periods. 

Ofwat said it recognised that SEW was not unique in its poor performance when compared to other companies in England and Wales but that it “is the company that is consistently underperforming regarding supply interruptions and its handling of extreme weather…without further action from the company, we consider there is a real risk of supply interruptions in the future and that the company will continue to not meet its domestic supply duty”.

The proposed fine does not take into account recent SEW outages in December 2025 and January 2026, partly caused by water treatment failures. These incidents are the subject of separate investigations by Ofwat and the Drinking Water Inspectorate.  

Ofwat said SEW had failed to learn from each incident or conduct sufficient root cause analysis, despite “sufficient awareness of the supply system resilience issues at the executive and board level”. The regulator was also critical of SEW’s maintenance scheduling, saying it did not give “sufficient regard for peak periods and system-wide risk”. 

A December 2022 outage caused by freeze-thaw conditions led to 316 burst mains and was worsened by two treatment works being down for planned maintenance, while another had been offline since November after a nearby river flooded. More than 84,000 customers were affected. 

Interim CEO of Ofwat Chris Walters said: “South East Water’s significant failings caused major disruption and had a huge impact on thousands of its customers. Not only did the company fail in its duty to provide a water supply to meet the demands of its customers, but it also fell short when it came to providing support for customers who lost their supply. They must do better.” 

Blame games

Ofwat’s enforcement notice repeatedly accused SEW of failing to take responsibility for supply failures in its network, warning that “as a result, supply interruptions are still happening too often”.

Following the outages last December, SEW CEO David Hinton was criticised for appearing to blame the incident on more people working from home. A similar argument was made after outages in summer 2020 that affected supply for 43,000 customers. SEW’s annual review that year partly blamed the issues on “a combination of warm weather and changes in water demand patterns associated with the impact of Covid-19, such as a focus of working from home”. 

Customers also told Ofwat they felt Hinton had blamed them for supply outages that forced several schools to close in summer 2023. In an email to customers at the time, he urged them to “use less water”.