Water regular Ofwat has fined Southern Water £126m for “serious failures” at its sewage treatment plants and for “deliberately misreporting its performance.”
Some £123m of the fine will be returned to customers through their bills over the next five years.
Proportionate to the size of Southern Water’s business, the package of penalties — which also includes a £3m fine — is the biggest ever imposed by Ofwat.
A two-year investigation into the company found that Southern Water failed to operate a number of its wastewater treatment plants properly, including by not making the necessary investment in its facilities.
This led to equipment failures and the spillage of wastewater into the environment, Ofwat said on Tuesday.
It also found that the company “manipulated” its wastewater sampling process, resulting in the misreporting of its performance and the subsequent evasion of penalties from the regulator.
“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,” Ofwat CEO Rachel Fletcher said on Tuesday.
“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.”
The fine would have been larger had Southern Water not cooperated with Ofwat’s investigation, addressed its failings, and agreed to the package of penalties, the regulator said.
In a statement, Southern Water said it was “profoundly sorry for these failures.”
“We have fully supported these investigations and completed our own internal review, which has highlighted failures of people, processes, and systems during that time.”
Its customers should expect a rebate on their bills of £61, with £17 coming in 2020-21 and £11 in each of the following four years.
Southern Water has also introduced new governance arrangements and a programme to change the company culture that had enabled these failings, Ofwat said.
Ofwat noted it had not investigated the environmental impact of Southern Water’s actions. The Environment Agency is separately investigating the company.