Southern Water handed £126m penalty over 'shocking' failures

Guardian

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25 June 2019, 07:28

Southern Water has been handed a record £126m penalty after “serious failures” in its sewage treatment sites and deliberately misreporting of its performance.

The package imposed by the regulator, Ofwat, includes compensation of £123m to customers over five years and a £3m fine. The water company’s 4.2 million customers will each receive £61 off their bills – £17 in 2020-21 and £11 in each of the following four years.

The Ofwat chief executive, Rachel Fletcher, said: “What we found in this case is shocking. In all, it shows the company was being run with scant regard for its responsibilities to society and the environment.

“It was not just the poor operational performance, but the coordinated efforts to hide and deceive customers of the fact that are so troubling.”

The regulator found Southern Water failed to operate a number of sewage treatment works properly, including not making the necessary investment, which led to equipment failures and spills of wastewater.

It also found that the company manipulated its wastewater sampling process and misreported the performance of several sewage treatment sites.

Southern Water said it was “deeply sorry” and added that the costs of the penalty would not be passed on to customers in the form of higher prices.

Ian McAulay, who was appointed chief executive in January 2017, worked closely with Ofwat and overhauled the company, including investment in the failing treatment sites.

McAulay said: “We are deeply sorry for what has happened. There are no excuses for the failings that occurred between 2010 and 2017 outlined in Ofwat’s report. We have clearly fallen far short of the expectations and trust placed in us by our wastewater customers and the wider communities we serve.”

Ofwat said the package of penalties and payments is the biggest it has ever imposed, proportionate to the size of the business. It would have been larger had Southern Water not cooperated with its investigation. The Environment Agency is investigating separately.

Last year, Thames Water, Britain’s biggest water company, received a £120m package of penalties from the regulator, including a £65m payment to customers, for its failure to tackle leaks.

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