Southern Water has agreed to pay £126m in penalties and payments to customers following serious failures in the operation of its sewage treatment sites and for deliberately misreporting its performance.
In the course of a large-scale investigation into the water company, Ofwat 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.
The rebate includes £91m in penalties Southern Water had avoided and a further £32m of payments as recognition of their serious failures.
Proportionate to the size of the business, this package of penalties and payments is the biggest Ofwat has ever imposed. The amount would have been larger had Southern Water not co-operated with our investigation, addressed its failings and agreed to this payment package.
Southern Water wastewater customers should expect a rebate on their bills of £61, with £17 in 2020/21 and £11 in each of the following four years.
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 and committed to new governance arrangements to support accurate monitoring and reporting, and a programme to change the company’s culture, which enabled these failings and behaviours. Investment has also been made into the failing treatment sites and work will continue to improve them.
As part of the proposed settlement, Southern Water will need to report to Ofwat on its progress in upholding these commitments.
