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| Southern Water faces prosecution after record £126m penalty | Southern Water faces prosecution after record £126m penalty |
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| 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 that polluted rivers and beaches in southern England. | 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 that polluted rivers and beaches in southern England. |
| The package imposed by the regulator, Ofwat, includes compensation of £123m to customers over five years and a £3m fine. The 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 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.” |
| Ofwat 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. | Ofwat 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, which operates in Kent, Sussex, Hampshire and the Isle of Wight, manipulated its wastewater sampling process and misreported the performance of several sewage treatment sites. | It also found the company, which operates in Kent, Sussex, Hampshire and the Isle of Wight, manipulated its wastewater sampling process and misreported the performance of several sewage treatment sites. |
| The regulator’s 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. | The regulator’s 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.” | “It was not just the poor operational performance, but the coordinated efforts to hide and deceive customers of the fact that are so troubling.” |
| 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. | 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 in a statement: “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.” | The chief executive, Ian McAulay, who was appointed in January 2017, said in a statement: “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.” |
| He said on BBC Radio 4’s Today programme: “It is perfectly reasonable to say there was dishonesty. That is incredibly disappointing and not the standard we want to have in this business and I was brought in to make sure that could not happen again.” He dodged a question about whether there should be criminal sanctions, saying: “This was a small number of people.” | |
| It is understood Southern Water has dismissed several people. McAulay said the company had overhauled its governance, invested £100m in new IT systems and £26m in wastewater assets, and vowed to invest several billions of pounds over the next five years. | |
| 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.” | 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.” |
| She said she supported the Environment Agency’s criminal investigation, and reiterated Labour would renationalise water companies if it was elected. | |
| “Instead of ripping off customers and creaming off the profits, Labour will ensure our water companies are run for the benefit of us all by taking them back into public ownership, lowering bills and investing to safeguard our water quality.” | |
| Ofwat said the package of penalties and payments was the biggest it had ever imposed, proportionate to the size of the business. It would have been larger had Southern Water not cooperated with its investigation. | Ofwat said the package of penalties and payments was the biggest it had ever imposed, proportionate to the size of the business. It would have been larger had Southern Water not cooperated with its investigation. |
| Matthew Wright, the former chief executive of Southern Water, was paid more than £5m by the company during his time at the helm, between 2011 and 2016, when the failings occurred. He is now the UK managing director of the Danish renewable energy firm Ørsted, which is building offshore wind farms in the UK. | |
| 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. | 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. |
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