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The water company Severn Trent has been spared a fine by the industry regulator despite “serious and unacceptable breaches” in its handling of wastewater and sewage.

The watchdog, Ofwat, which has been investigating how wastewater and sewage networks are managed across the industry, found that the FTSE 100 company breached its duties by failing to effectively provide drainage and deal with the contents of its sewers.

Severn Trent, which supplies water to more than 8 million people across England and Wales, did not have the systems and processes in place required to monitor and maintain its network during the period examined, Ofwat said.

Severn Trent is the eighth case that Ofwat has completed in its industry-wide wastewater investigation, which has resulted in fines and enforcement packages worth more than £300m.

In all other seven cases, Ofwat issued fines ranging from £11m to £104m. The biggest penalty was for Thames Water in May last year over wastewater failures.

Ofwat highlighted that, unlike the previous seven cases, Severn Trent proactively identified problems in its network and began dealing with them before a case was opened in July 2024.

The company now has the right processes in place and has invested £98m of shareholder funds into improving its infrastructure, Ofwat said. This has helped lead to a 41% reduction in spills from each storm overflow in 2025, compared with 2024, despite experiencing heavier rainfall than some other regions.

Shares in Severn Trent fell nearly 2% on Wednesday.

Lynn Parker, Ofwat’s senior director for enforcement, said: “Our investigation found serious and unacceptable breaches by Severn Trent Water – that is not in question and the company accepts it.

“But their response to those failures sets a standard we expect from all companies: identifying the problem, proactively investing to fix it and cooperating openly with the regulator. The 41% reduction in spills we are now seeing is what genuine accountability looks like in practice.”

She added: “We will always act where companies fail their customers and the environment. But we will also be clear, publicly, when a company does the right thing.”

Ofwat is still investigating the water companies United Utilities and Hafren Dyfrdwy (a Welsh provider owned by Severn Trent) as part of its sector-wide investigation.

James Jesic, the chief executive of Severn Trent, said: “We accept Ofwat’s findings relating to issues that we proactively identified and began addressing these before the enforcement case was opened.

“Our investment programme in spills reduction continues across our region at pace with the strength of our whole organisation and supply chain behind it. We still have work to do and remain absolutely focused on delivering further improvements for our customers and the environment.”

The Guardian reported on Saturday that Severn Trent had doubled the size of a long-term reward scheme for Jesic to as much as £3.1m and that he could receive significantly more than his predecessor, despite anger over water bosses’ pay.

Severn Trent said its long-term incentive plan (LTIP) would increase from 200% of his base salary to 400%, according to changes revealed in the company’s most recent annual report. Jesic, who became chief executive in January, could receive as much as £4.8m in a single year after salary, annual bonus, LTIP and benefits are counted.

Severn Trent said at the weekend: “Our remuneration policy follows both the letter and the spirit of Ofwat’s rules. We have been completely open with Ofwat and our application of the rules, which apply to all our incentive programmes, is entirely compliant and is funded by shareholders and not customer bills.”