Photo description: Aerial view of two large blank tanks. Photo by Ian on Unsplash.

Ofwat has launched a statutory consultation on updating its Performance related executive pay (PRP) prohibition rule to reflect new upcoming environmental reporting on water only companies (WOCs).

Ofwat is proposing to update the rule to ensure that WOCs will be obligated to prohibit performance related pay for water company directors if a Category 1 incident affecting water is recorded in new annual reporting published by the Environment Agency.

The change would bring WOCs into line with similar existing requirements for water and sewerage companies. Subject to consultation, Ofwat says this requirement would apply to bonuses and other performance related pay in relation to the 2026-27 financial year onwards.

Ofwat his asking for responses on the consultation questions by 27 February 2026, and intends to publish responses to this consultation on its website in due course.