Southern Water faces prosecution after record £126m penalty

Southern Water faces prosecution by the Environment Agency after being handed a record £126m penalty by the water regulator over "shocking" failures at its sewage treatment sites.

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 Environment Agency said it was pursuing its own criminal investigation into Southern Water, which began in 2016. "The environmental aspect of the investigation is ongoing and we expect to commence court proceedings soon."

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 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. The company is owned by the Greensands consortium of infrastructure investors and pension funds.

The chief executive, Ian McAulay, who was appointed in January 2017, 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."

Rebecca Long Bailey, the shadow secretary of state for business, energy and industrial strategy, said: "Today's eye-watering fines and forced customer rebates demonstrate clearly just how broken our water system is. Despite failures, chronic underinvestment and exorbitant customer bills, many water companies continue to pay out hefty dividends to shareholders."

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.

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.

This article first appeared at the Guardian

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