Yorkshire Water has announced that Nicola Shaw has decided to step down as chief executive following four and a half years leading the business.

It has also been revealed that Nicola Medalova is joining Yorkshire Water on 2 November, as CEO designate, which the company said would enable a smooth leadership transition.

She will succeed Ms Shaw as chief executive on 1 January 2027.

During an executive career at National Grid, Ms Medalova held a number of senior leadership positions, most recently serving as chief of staff to the group CEO .

The statement added: “Nicola Shaw will continue to lead the business during a structured handover period, working closely with Nicola Medalova to ensure continuity and improvement for customers, stakeholders, employees and shareholders.”

Earlier this week, it was revealed that the water sector’s environmental performance fell to a record low last year despite reforms and investment, according to the first joint report by regulators.

The Environment Secretary has summoned water bosses to Whitehall to explain their failures and outline immediate action following the report’s publication on Thursday.

Southern Water, Thames Water, South West Water and Yorkshire Water – the companies with one-star (poor) ratings – will automatically be blocked from giving out bonuses to bosses under new rules introduced last year.

In January, MPs criticised water companies appearing to evade bans on bosses’ bonuses as they grilled Ofwat about preventing payments from parent firms.

The Public Accounts Committee questioned the regulator about how “complex and opaque” corporate structures mean senior executives can still receive additional payments from unregulated parent companies.

Earlier this year, Yorkshire Water’s chief executive Ms Shaw faced criticism when it emerged that she received £1.3 million in undisclosed payments from the parent company over two years.

Jon Lewis, Chair of Yorkshire Water, said: “I would like to thank Nicola Shaw for the important contribution she has made to Yorkshire Water. Under her leadership, the company secured £500m of new shareholder equity, with a further £600m committed, enabling us to embark on the largest investment programme in our history and accelerate work to strengthen the resilience of Yorkshire’s water network. She leaves the business with strong foundations for the next phase of investment and improvement.

“We are delighted that Nicola Medalova will become our next chief executive. She is an accomplished and inspiring leader, with deep operational experience and a strong track record of delivering major capital programmes in complex environments. She is passionate about delivering for customers and brings a strong understanding of the environmental responsibilities that sit at the heart of Yorkshire Water’s role.

“Importantly, she also knows Yorkshire Water well from her time as a Non-Executive Director on the board. The board believes she is the right person to lead the company through its next phase, improving service for customers, reducing pollution and delivering the investment needed to modernise Yorkshire’s water network.”

Ms Shaw said: “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. These jobs are challenging but fulfilling and I am especially grateful for the dedication and commitment of colleagues at all levels throughout the business across this county — thank you all. This now feels like the right time to begin an orderly transition to the company’s next chapter. I know Nicola Medalova will do an outstanding job leading the company and I look forward to working closely with her over the coming months to ensure a seamless handover.”

Ms Medalova said: “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. I’m looking forward to getting to know Yorkshire Water, its people and the communities it serves. My immediate priority will be to listen and learn, while maintaining a relentless focus on delivery. Yorkshire Water will ultimately be judged by what it delivers for customers, communities and the environment, and I’m excited about the opportunity to help shape its future.”