Southern Water has agreed to pay £126m in penalties and payments to customers. This is due to serious failures in the operation of its sewage treatment sites and for deliberately misreporting its performance.
Ofwat has found that Southern Water failed to operate a number of wastewater treatments works properly, including by not making the necessary investment which led to equipment failures and spills of wastewater into the environment.
Ofwat also found that Southern Water manipulated its wastewater sampling process which resulted in it misreporting information about the performance of a number of sewage treatment sites. This meant the company avoided penalties under Ofwat’s incentive regime.
The £126m package will see Southern Water pay a rebate of £123m to customers through their bills and pay a fine of £3m.
Proportionate to the size of the business, this package of penalties and payments is the biggest Ofwat has ever imposed.
Southern Water appointed a new Chief Executive in January 2017 and there have been substantial changes to the company’s management team following this. Southern Water has introduced new governance arrangements to support accurate monitoring and reporting, and a programme to change the company’s culture. Investment has also been made into treatment sites.
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 co-ordinated efforts to hide and deceive customers of the fact that are so troubling.
“Today’s announcement should also serve as a reminder to all other companies about the gravity of their responsibilities to society and the environment and that we will take action if they neglect them.”
The Environment Agency is currently investigating Southern Water for the environmental impact of its failures.