Nicola Shaw, chief executive of Yorkshire Water since 2022, has announced her resignation effective 1 January 2027, one day after the Environment Agency assigned the company its lowest possible environmental rating. She will be succeeded by Nicola Medalova, a chartered environmental health officer who previously held a senior role at National Grid.
According to BBC News, Shaw's departure comes amid mounting criticism of her leadership, including controversy over £1.9m in undisclosed payments made between 2023 and 2026 by the company's parent firm, Kelda Holdings, which the organisation described as compensation for "investor engagement" and "financial oversight".
On Thursday, the Environment Agency downgraded Yorkshire Water to a one-star rating—the lowest of four possible grades—classifying it as a "poorly performing company". The agency attributed this to 260 pollution incidents recorded in 2025, the highest annual total since 2011. Pollution incidents rose from 151 in 2024 to 260 in 2025, an increase of more than 70%.
In her resignation statement released on Friday, Shaw described leading Yorkshire Water as a "privilege" and said the timing was appropriate for her departure. She added:
It has been a privilege to lead Yorkshire Water and serve the people of Yorkshire. Although there remains a huge amount of work to do, I am extremely proud of what our colleagues have achieved, putting the business on a stronger footing for delivery across all aspects of its work.
Who is the incoming chief executive?
Medalova brings environmental health expertise and prior experience in the energy sector. She previously served as a non-executive director on Yorkshire Water's board, giving her existing familiarity with the company's operations and challenges. She will join the organisation on 2 November 2026 in a CEO designate capacity, working alongside Shaw during a structured transition before formally assuming the chief executive role on 1 January 2027.
Medalova stated:
I am delighted to be joining Yorkshire Water and grateful to the board for the opportunity to lead the business through its next chapter. Yorkshire Water faces huge challenges but also great opportunities for continued improvement and I look forward to working with Nicola Shaw, the leadership team and colleagues across the business as I get up to speed.
What regulatory penalties has the company faced?
Yorkshire Water's operational and environmental record has drawn significant regulatory action. In 2024, Ofwat announced a £47m fine for historic sewage leaks. The one-star environmental rating carries additional consequences: the lowest rating automatically blocks Yorkshire Water from awarding executive bonuses under rules introduced last year.
What is the background to the payment controversy?
Shaw faced sustained criticism over compensation arrangements that remained undisclosed until August 2025, when the government banned Yorkshire Water and five other water companies from paying "unfair" bonuses to executives. The £1.9m total comprised £1.3m in shareholder-funded payments across two instalments, plus a further £660,000 paid earlier in 2026. Ofwat confirmed these payments were not performance-related.
In December 2025, Shaw acknowledged that "not being transparent" about the £1.3m payments had been a "mistake", though she maintained the amounts were "not for me to decide". The payments were made by Kelda Holdings rather than from Yorkshire Water's operational budget.
How have politicians responded?
Shaw's resignation has drawn sharp criticism from elected representatives. Tom Gordon, Liberal Democrat MP for Harrogate and Knaresborough, said:
Good riddance. Nicola Shaw oversaw abysmal management of our precious natural resources, trashing our rivers while receiving an eye-watering salary. Her replacement needs to understand that residents are at their wits' end, paying ever-rising bills for polluted rivers and threats of hosepipe bans while someone at the top rakes in millions.
Judith Cummins, Labour MP for Bradford South, argued the company requires more than a change in leadership. She said:
A new face at the top cannot wash away years of Yorkshire Water failing to put customers first. Nicola Shaw's time as Yorkshire Water boss saw customers frustrated by poor service, skyrocketing bills, record pollution incidents, and a plummet from 'good' to the worst possible one-star environment rating. There must be a wholesale shift in culture that finally prioritises customers. Only then can the company begin to restore public trust.
What is the broader context for water company performance?
Yorkshire Water's downgrade reflects wider deterioration across England's water sector. Four English water companies including Yorkshire Water and South West Water have been downgraded to the lowest environmental rating by the Environment Agency due to pollution surges, with only Severn Trent achieving the highest rating in 2025. This follows a pattern documented by regulators, with environmental performance at eight of nine English water companies deteriorating again despite ongoing investment commitments.
What investment plans does Yorkshire Water have?
Despite its regulatory challenges, Yorkshire Water has secured substantial capital for infrastructure improvement. The company said it had secured £500m in new shareholder equity, with another £600m committed, to support its largest-ever investment programme aimed at reducing leaks and improving environmental outcomes.
What happens next?
Medalova will begin her role as CEO designate on 2 November 2026, working with Shaw and the leadership team during a handover period. She will formally take over as chief executive on 1 January 2027. Her immediate priorities are expected to include addressing the operational failures that led to the one-star rating, managing customer relations amid rising bills, and implementing the company's expanded investment programme to reduce pollution incidents and improve service reliability.
