Heathrow ‘responded well’ to power outage, review finds; Ofwat fines Thames Water £123m

Heathrow made ‘right decisions’ after power outage, internal review finds

Graeme Wearden

The internal inquiry into the closure of Heathrow on 21 March this year has found that the airport ‘responded well’ to the power disruption that led to widespread flight cancellations.

The Kelly Review, conducted by Ruth Kelly, former secretary of state for transport, has concluded that the fire at a National Grid substation in North Hyde, west London, caused by a transformer failure, was “unprecedented”.

The resulting “significant disruption” affected approximately 200,000 passengers, who were either planning to depart from Heathrow on Friday 21 March or were travelling to the airport on long-haul flights.

The Review has concluded that Heathrow was right to suspend operations shortly after its power connection was disrupted, and “reasonable” to stop operations for the whole day.

It says:

We have concluded that the airport responded well on the day and was able to restore full operations smoothly the following day.

The Review has, however, identified a number of lessons learned and makes several recommendations on how the Airport should now further enhance its ability to respond to major incidents such as this one.

In April, it emerged that airlines had warned Heathrow about risks to its power supply, and claimed that the airline could have restored operations sooner.

Kelly, though, has concluded that the airline acted correctly.

She says:

The evidence confirms that Heathrow made the right decisions in exceptionally difficult circumstances. Whilst the disruption was significant, alternative choices on the day would not have materially changed the outcome.

The airport had contingency plans in place, and the report highlights that further planned investment in energy resilience will be key to reducing the impact of any similar events in the future.”

Here are the key findings from the report:

The decision taken by the airport, approximately 90 minutes after the power outage, to stop operations immediately was correctly made and essential to protect the safety and security of people, as well as the integrity of the Airport and the UK border.
In the early hours of 21 March, it was also reasonable to decide to stop operations until 23:59 that day, especially as decision-makers had in mind that if operations at the Airport could safely resume sooner, the timetable could be brought forward – as in fact did happen.
After consultation with airlines, Heathrow began accepting limited types of flight arrivals from 16:00 into select terminals and permitted a limited number of departures from 20:00. It then reopened fully on 22 March 2025. There may have been opportunities to open parts of the Airport slightly sooner (but for limited operations only) than in fact occurred on 21 March. This likely would have been only by a maximum of a couple of hours or so because of the time needed for critical systems to be checked and confirmed as operational after power was restored.
The timing and extent of reopening on 21 March was impacted by other highly relevant factors running in parallel throughout that day. Principally, these related to whether it would be possible for the Airport to restore connection to a resilient supply of power from North Hyde during that day (so the Airport could return to its original three electricity supply points), while not jeopardising a full resumption of operations the next day, 22 March. Although the decision to attempt to restore such a connection may have extended the time in which operations were stopped, this was the correct decision.
Due to the challenging nature of recommencing a full flight schedule in the course of the day, we do not consider an earlier reopening of parts of the Airport would have had a significant impact on passenger disruption. The vast majority of flight cancellations and the impact to passengers would likely still have occurred.

Key events

Centrica Energy will open its first office in the US as part of a wider expansion project in North America.

The energy trading company, which sits within the same group as British Gas, has announced it will open a new office in New York that will focus on building a physical gas business.

Chris O’Shea, the group chief executive of Centrica, said the decision to open an office in New York “underscores our commitment to growing our business and enhancing our capabilities for existing and new customers” and that it will help the company strategy to “support energy security, affordability, and decarbonisation in key markets around the world.”

Graeme Wearden

Although the Kelly Review has concluded that Heathrow responded well to the power outage in March, it also has four pages of recommendations for how the airport can improve.

They include:

Better communications during critical incidents that involve third-party suppliers
A review of whether Heathrow’s critical safety systems remain operational following a power outage.
Enhancing its systems for notifying key individuals of significant incidents.
Considering if there is “a proportionate solution” to provide specific real-time updates to Here to Help and other Heathrow staff members in the recovery phase of critical incidents.
A technical study should be conducted into whether a HV [high voltage] Ring could mitigate risks for the Airport of a total loss of power from one of its High Voltage Power Supplies or reduce the time the Airport would need to close in such an event
Considering whether further diesel generator or other battery back-ups could improve resilience during critical incidents.

You can see the full list here (starting on page 66).

Heathrow made ‘right decisions’ after power outage, internal review finds

Graeme Wearden

The internal inquiry into the closure of Heathrow on 21 March this year has found that the airport ‘responded well’ to the power disruption that led to widespread flight cancellations.

The Review has concluded that Heathrow was right to suspend operations shortly after its power connection was disrupted, and “reasonable” to stop operations for the whole day.

It says:

We have concluded that the airport responded well on the day and was able to restore full operations smoothly the following day.

The Review has, however, identified a number of lessons learned and makes several recommendations on how the Airport should now further enhance its ability to respond to major incidents such as this one.

In April, it emerged that airlines had warned Heathrow about risks to its power supply, and claimed that the airline could have restored operations sooner.

Kelly, though, has concluded that the airline acted correctly.

She says:

The evidence confirms that Heathrow made the right decisions in exceptionally difficult circumstances. Whilst the disruption was significant, alternative choices on the day would not have materially changed the outcome.

The airport had contingency plans in place, and the report highlights that further planned investment in energy resilience will be key to reducing the impact of any similar events in the future.”

Here are the key findings from the report:

The decision taken by the airport, approximately 90 minutes after the power outage, to stop operations immediately was correctly made and essential to protect the safety and security of people, as well as the integrity of the Airport and the UK border.
In the early hours of 21 March, it was also reasonable to decide to stop operations until 23:59 that day, especially as decision-makers had in mind that if operations at the Airport could safely resume sooner, the timetable could be brought forward – as in fact did happen.
After consultation with airlines, Heathrow began accepting limited types of flight arrivals from 16:00 into select terminals and permitted a limited number of departures from 20:00. It then reopened fully on 22 March 2025. There may have been opportunities to open parts of the Airport slightly sooner (but for limited operations only) than in fact occurred on 21 March. This likely would have been only by a maximum of a couple of hours or so because of the time needed for critical systems to be checked and confirmed as operational after power was restored.
The timing and extent of reopening on 21 March was impacted by other highly relevant factors running in parallel throughout that day. Principally, these related to whether it would be possible for the Airport to restore connection to a resilient supply of power from North Hyde during that day (so the Airport could return to its original three electricity supply points), while not jeopardising a full resumption of operations the next day, 22 March. Although the decision to attempt to restore such a connection may have extended the time in which operations were stopped, this was the correct decision.
Due to the challenging nature of recommencing a full flight schedule in the course of the day, we do not consider an earlier reopening of parts of the Airport would have had a significant impact on passenger disruption. The vast majority of flight cancellations and the impact to passengers would likely still have occurred.

Nissan reportedly seeking to raise $7bn, with backing from UK government

The Japanese car maker Nissan is reportedly looking to raise more than $7bn from debt and asset sales so that it can keep its operations on track, according to a report by Bloomberg News.

The company is also reportedly planning to take out a £1bn syndicated loan, backed by UK Export Finance, a state body. Nissan’s car factory in Sunderland is the biggest in Britain.

Earlier this month the National Wealth Fund and UK Export Finance also agreed to provide financial guarantees that supported the Japanese battery maker AESC. It formed part of a £1bn package that will allow the company to start production at a new electric car battery plant, also in Sunderland, which supports the Nissan factory.

Thousands of energy customers in line for payouts over forced prepayment meter fittings

Thousands of people who had prepayment meters force-fitted in their homes are to share more than £18.6m in compensation and debt write-offs on their energy bills.

The energy regulator Ofgem has found that energy companies forced prepayment meters on more than 150,000 homes that were not keeping up with their bills.

Eight companies – Scottish Power, EDF, E.ON, Octopus, Utility Warehouse, Good Energy, TruEnergy and Ecotricity – have agreed to pay compensation and write off energy debts for at least 40,000 consumers.

Shein is reportedly aiming to list on the Hong Kong exchange, as the company struggles to get the green light from Chinese regulators for a flotation in London.

The company, which was founded in China, is one of the biggest fast fashion retailers in the world and was valued at $66bn (£48.9bn) in a 2023 fundraising round. My colleague Sarah Butler has the story in full:

UN labour agency cuts global job growth forecast

The United Nations labour agency now expects 53m jobs to be created this year, seven million less than previously forecast, as the global economy grapples with trade wars and geopolitical tensions.

Gilbert F Houngbo, director-general of the International Labour Organization, said:

If geopolitical tensions and trade disruptions continue, and if we do not address fundamental questions that are reshaping the world of work, then they will most certainly have negative ripple effects on labour markets worldwide.

Jobs that are closely linked to the health of American consumer demand are increasingly at risk due to trade tensions, the ILO found. Canada and Mexico have the highest share of jobs exposed, it added, at 17.1%. But the Asia Pacific region is where most of the vulnerable jobs, 56 million, are concentrated.

The ILO has also lowered its prediction for global economic growth to 2.8%, down from 3.2%.

The number of Germans out of work rose at a faster pace than expected in May.

Labour office figures from Germany showed the number of unemployed people increased by 34,000 in seasonally adjusted terms to 2.96 million, approaching the 3 million mark for the first time in the past decade.

Meanwhile separate figures released in the UK suggest that an estimated 14.1% of British working age households have no member in employment.

The Office for National Statistics has estimated that 59.5% had all household members aged 16 years and over in employment during January to March 2025. An estimated 26.5% of households had at least one working and one workless adult.

Car maker Stellantis has named Antonio Filosa as its new chief executive.

The company, which makes 14 different car brands including Fiat, Peugeot and Vauxhall, has said that Filosa, the current Italian head of its North American operations, will take the top job from 23 June.

Filosa, 51, will be tasked with reviving fortunes at Stellantis, which last month pulled its full-year guidance due to uncertainty around US trade tariffs.

The former chief executive Carlos Tavares resigned in December, an abrupt exit that came amid falling sales and a profit warning just a few months prior.

Thames Water must be a ‘public benefit company’, say Lib Dems

Tim Farron, the Lib Dem spokesperson for environment, food and rural affairs has said Thames Water has “saddled customers with its debts and provided them with shoddy service”.

This should be the final nail in the coffin for Thames Water. It needs to be turned into a public benefit company and Ofwat needs to be scrapped and replaced with a real regulator with teeth.

Meanwhile Ellie Chowns, Green MP for North Herefordshire, has argued that the water company should be nationalised.

“This milestone is only the start. We cannot allow private shareholders to reap vast payouts while communities suffer from raw sewage spills and fragile ecosystems collapse.

The time has come to bring our water services back into public ownership, where accountability and long-term stewardship of our precious resources must come before corporate dividends.

River Action calls for Thames Water to be put into a special administration regime

James Wallace, chief executive of the campaign group River Action, has said “nothing will change unless the privatisation of Thames Water stops”.

What a miserable mess. Thames Water poured sewage into our rivers for nearly 300,000 hours last year while racking up over £22 billion in debt. It has ripped off customers, damaged the environment, and failed to invest in solutions.

At last, we are seeing a government using the law and punishing a major polluter. But nothing will change unless the privatisation of Thames Water stops. The Secretary of State for Defra must now put this failing company into Special Administration and restructure its ownership and governance so it can be owned by and operated for public benefit. Only then will the River Thames and customers see an end to pollution for profit.

London’s stock market is up slightly this morning, with the FTSE 100 blue chip index and the mid-cap FTSE 250 index both up by about 0.2%.

B&Q owner Kingfisher is languishing at the bottom of the FTSE 100, with its share price down 1.6%. It reported this morning that revenue in the first quarter rose by 1.6% to £3.31bn, better than expected, helped by warm weather in the UK.

But the update paints a tale of two markets, says Mark Crouch, market analyst at the broker eToro.

On home turf, the UK and Ireland are showing real signs of life. Sales jumped over 6%, with e-commerce and trade customers doing the heavy lifting, while big-ticket items are also back in fashion, encouraging evidence that UK consumers are starting to loosen the purse strings and finally dusting off the toolbelt.

Across the Channel, though, it’s a different story. In France, like-for-like sales slipped 4.9%, marking yet another quarter of underperformance, and despite efforts to streamline operations, the region remains a costly fixer-upper for Kingfisher, with consumer sentiment still stuck in the red.

Elsewhere this morning, New Zealand has cut interest rates for a sixth meeting in a row.

New Zealand’s central bank cut its benchmark rate by 25 basis points to 3.25%.

Economists are still expecting further rate cuts in the country, says Ipek Ozkardeskaya, an analyst at Swissquote Bank.

Reserve Bank of New Zealand (RBNZ) lowered its interest rate by 25bp as expected and projected further cuts due to downside risks from the global trade war, which continues to weigh on New Zealand’s exports and broader domestic growth outlook.

The Kiwi was little changed against the dollar. The AUDUSD, on the other hand, slipped below its 200-DMA on the back of a broad-based US dollar rebound.

The RBNZ cuts its cash rate from 3.5% to 3.25% as expected citing weaker demand and inflation and spare capacity. Its guidance was mixed but lowered its expected terminal cash rate to 2.9% from 3.1%. pic.twitter.com/UplpuedBeh

— Shane Oliver (@ShaneOliverAMP) May 28, 2025

Grocery prices are still rising – up 4.1% in the four weeks ended on 18 May,

That represents the highest rate since February 2024, according to market researcher Kantar, and takes us into new territory this year, says Fraser McKevitt, head of retail and consumer insight at the company.

Households have been adapting their buying habits to manage budgets for some time, but we typically see changes in behaviour once inflation tips beyond the 3% to 4% point as people notice the impact on their wallets more.

It is maybe not so surprising then that shoppers are looking for more bargains on supermarket shelves. Discounters achieved their strongest combined growth since January 2024, Kantar found, at 8.4%. Lidl reached a new market share high of 8.1%, with sales up by 10.9%. That puts it just behind Morrisons, which ranks as the fifths biggest supermarket chain at 8.4% of the market share.

The penalties against Thames Water will be paid by the company and its investors, not customers, the regulator has said.

Ofwat’s investigation found that interim dividend payments worth £37.5m in October 2023 to the holding company, Thames Water Utilities Holdings Limited, and further dividend payments worth £131.3m in March 2024 broke the rules.

Thames Water is currently in “cash lock up” and no further dividend payments can be paid without approval from Ofwat.

Environment secretary Steve Reed says the government has launched toughest crackdown on water companies in history

Last week we announced a record 81 criminal investigations have been launched into water companies. Today Ofwat announce the largest fine ever handed to a water company in history.

The era of profiting from failure is over. The Government is cleaning up our rivers, lakes and seas for good.

Introduction: Ofwat fines Thames Water nearly £123m

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The national water regulator Ofwat has fined Thames Water nearly £123m after two investigations into the company.

The watchdog has ordered Thames Water to pay a £104.5m penalty for breaches of rules connected to its wastewater operations, which is the largest penalty that Ofwat has ever issued.

That is on top of an additional penalty of £18.2m for breaches relating to dividend payments. It represents the first time Ofwat has taken action against a company that has paid dividends regardless of its performance.

The watchdog found Thames Water has caused an “unacceptable impact on the environment and customers”.

David Black, the chief executive of Ofwat, has said:

This is a clear-cut case where Thames Water has let down its customers and failed to protect the environment. Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations. The company also failed to come up with an acceptable redress package that would have benefited the environment, so we have imposed a significant financial penalty.

Thames Water has said that it takes its responsibility towards the environment “very seriously”.

A spokesperson for Britain’s biggest water company has said:

We take our responsibility towards the environment very seriously and note that Ofwat acknowledges we have already made progress to address issues raised in the investigation relating to storm overflows.

The dividends were declared following a consideration of the Company’s legal and regulatory obligations.

Our lenders continue to support our liquidity position and our equity raise process continues.