A watchdog has slapped Southern Water with a £126m fine after “serious failures” in how the company operated sewage treatment sites over a seven-year period.
A lack of investment in a number of Southern Water sewage treatment sites led to equipment failures and sewage spilling into the environment, regulator Ofwat said today.
The firm also misreported the performance of a number of sewage treatment sites, meaning it avoided £91m in penalties from Ofwat.
The period covers 2010 to June 2017, when Ofwat began investigating.
Ofwat has now issued its heaviest ever fine in proportion to the size of the business, forcing Southern Water to repay customers £123m through their bills and a £3m fine.
That £123m figure includes the £91m Southern Water avoided in penalties and another £32m “as recognition of their serious failures”, Ofwat 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,” said Ofwat boss Rachel Fletcher.
“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. The previous management failed to stamp out this behaviour and failed to manage its plants properly.
“In doing so, Southern Water let-down its customers and operated in a way completely counter to the public service ethos we expect.”
Southern Water sewage customers should receive a rebate on their bills of £61 in total, with £17 coming in 2020-21 and £11 per year for the four years following that.
Southern Water appointed a new chief executive, Ian McAulay, at the start of 2017 and has made “substantial” management team changes since Ofwat’s discovery.
That includes new governance to ensure accurate sewage monitoring and a culture change programme.
It has also invested in the failing sewage treatment sites and must update Ofwat on its progress on its new commitments.
“The rebates on customer bills will go some way towards putting things right. It is now for Southern Water, under its new leadership, and with the improvements it is introducing, to show it has learnt from this unacceptable behaviour and can be trusted again,” Fletcher said.
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“We have fully supported these investigations and completed our own internal review, which has highlighted failures of people, processes and systems during that time,” said McAulay.
“We are profoundly sorry for these failures and have been working very hard to understand past failings and implement the changes required to ensure we better deliver for our customers and meet the standards they deserve.”