Water regulator Ofwat said its investigation found the not-for-profit company had failed to adequately operate, maintain, and upgrade its wastewater assets.
It also found that Welsh Water’s senior management and Board failed to have proper oversight to ensure the company was meeting its legal requirements.
In response, Welsh Water has apologised and accepted the findings, agreeing to a redress package that will fund environmental improvements rather than being paid from customer bills.
Lynn Parker, Senior Director for Enforcement at Ofwat, said the investigation had uncovered significant failings.
“Our investigation has found serious and unacceptable breaches in how Dŵr Cymru Welsh Water has operated and maintained its sewage works and networks, which has resulted in excessive spills from storm overflows to the environment,” she said.
“We now expect them to focus on putting things right so that customers can regain trust in their water company and the critical service they provide.”
Ofwat said the £44.7m package will be funded from Welsh Water’s retained profits, as the company does not have shareholders.
The bulk of the money – £40.6 million – will be targeted at reducing spills at specific overflows and tackling groundwater seeping into the sewer network, which is a major cause of frequent spills.
A further £4.1 million will be invested to improve river water quality, including a new £1 million ‘Cymuned Natur’ fund to support local environmental groups.
Welsh Water said it had already started a “major transformation programme” to improve performance and strengthen oversight.
A spokesperson for the company said: “We accept the findings of Ofwat’s investigation and apologise for where we have fallen short of the standards that our customers and regulators rightly expect from us.”
“We have already taken steps to strengthen our governance, oversight and compliance arrangements as part of a wider transformation programme across the business.”
The company added that the redress package was in addition to the £4.2 billion it is investing between 2025 and 2030, with £2.5 billion of that dedicated to environmental improvements.
Ofwat’s investigation into Welsh Water is the seventh case in a wider probe into the wastewater sector, which has now resulted in enforcement packages totalling over £300 million.
A public consultation on the proposed enforcement package is now open and will close on April 2.
