Ofwat confirms £30.5m package for South East Water
- Undertakings and redress package concludes Ofwat's three investigations into the company
- South East Water will have an Independent Monitor to support Ofwat's monitoring and review of the company's delivery of the undertakings including its Performance Improvement Plan, and wider financial and operational turnaround
- Redress package will be paid for by the company's shareholders, and will not come from customer bills
Ofwat has secured a £30.5m redress package from South East Water following the conclusion of three investigations into repeated supply disruptions, customer service failings and its recent credit rating downgrade. The company has also committed to develop and deliver a Performance Improvement Plan to drive an improvement in its performance.
In March 2026, Ofwat consulted on a proposed £22m fine following an investigation into supply disruptions which affected more than 286,000 customers across Kent and Sussex between 2020 and 2023. Ofwat found that the company had failed to plan sufficiently, maintain key infrastructure or learn from previous incidents - leaving the system unable to cope during extreme weather or periods of high demand.
A second investigation was opened in January 2026 following further supply interruptions in Tunbridge Wells and across Kent and Sussex between November 2025 and January 2026, including during Storm Goretti, which left up to 70,000 homes without supply. It examined whether South East Water had met its obligations to support customers when things go wrong.
Ofwat found that the company failed to communicate clearly and accurately with customers in a timely manner and did not provide all affected customers with adequate bottled water supplies. Customers had no tap water, were unable to shower or bathe and faced long delays when travelling to and queuing at bottled water stations. Some had to cancel work due to school closures and others had difficulty dealing with medical conditions.
The third investigation followed the downgrade of South East Water's credit rating by Moody's on 28 May, which meant that the company was in breach of its licence condition P26, which requires it to have two investment grade credit ratings. Moody's in particular focused on supply resilience concerns, similar to those identified in Ofwat's investigations.
As a result of the findings, South East Water has committed to take steps to address its failings in all three investigations to improve its supply resilience and customer service. The final £30.5m package reflects the full extent of failings identified across the supply resilience and customer care investigations and commits the company to fixing the problems identified via a Remediation Plan, including requiring the company to identify the root causes of its operational failures, supported by an independent technical assessment.
To address the credit downgrade, the company has also committed to produce and publish a Performance Improvement Plan setting out how it will deliver sustained improvement in its performance for customers and the environment. Ofwat will monitor delivery of this plan with the support of an Independent Monitor that will report directly back to Ofwat, the cost of which will be met by the company and is separate from the £30.5m redress package.
The redress package will include:
- £13m of ringfenced funds that will be wholly funded by shareholders to go towards its Remediation Plan, following the technical review of those actions outlined above.
- £1m allocated to provide site specific storage and works at vulnerable sites within the area served by South East Water to improve resilience.
- £5m to provide on site storage for key non-household users to be linked with smart metering technology which will assist with managing supply during peak demand;
- £5m to provide free water butts for households associated with targeted messaging to recipients in advance and during peak demand;
- £5m to bring forward smart metering from 2030 to non-household premises to improve demand management in advance of and during peak demand;
- £1.5m for a community fund to provide support for areas in Kent and Sussex that were impacted by significant supply failures, through charities, community groups and not-for-profit organisations.
Helen Campbell, Executive Director, Delivery, at Ofwat, said:
"South East Water must now focus on what matters most - its customers. These failures have caused real disruption and hardship for residents and businesses across many years, and supply interruptions of this scale have happened far too often.
"This package is the first step towards full accountability and to improving overall performance, and we welcome the company's engagement to bring these cases to a conclusion. But the work doesn't stop today - South East Water needs to make meaningful, lasting changes to ensure customers can rely on the service they receive."
Ofwat will closely monitor the company's delivery of these undertakings, and their wider efforts to turnaround performance for customers. The appointment of the independent monitor will be made in due course.
Notes to editors:
- The cost of the independent monitor will be paid for by South East Water and is separate from this enforcement package.
- Ofwat will now commence a procurement process and will seek to appoint the monitor at pace.
- The decision documents can be found on Ofwat's website here.
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