Southern Water fined £20 million for overcharging

Water firm Southern Water has been fined over £20 million after an investigation found that it had deliberately misrepresented information, and provided a poor service to its customers.

Ofwat, the water watchdog, confirmed the £20.3 million fine, which represents more than 3.5% of Southern Water’s annual turnover. Their investigation, which began in October 2005, found that Southern Water had behaved “unacceptably” over a long period of time.

Southern Water’s misdemeanors included giving Ofwat incorrect information regarding response times to customer complaints, and failing to make obligatory guaranteed standard payments when targets for resolving complaints were not met. Furthermore, due to Southern Water’s misreporting, customer bills were higher than they should have been.

Regina Finn, cheif executive of Ofwat, said of the fine: “We expect companies to comply with their obligations and this fine sends a clear message that non-compliance is not a cheap or easy option.”

Southern Water has apologised to its customers, and has said that it will be reducing future bills to compensate for the past overcharging. Over the next three years, customers will save an average of £10.

Les Dawson, chief executive of Southern Water, said: “Today’s announcement draws a line under a shameful period in the company’s history when an area of the business was deceiving our customers and the regulator.

“The new management team has put procedures into place to ensure this will never happen again.”

The entire cost of the fine will fall upon the company’s shareholders. The Consumer Council for Water welcomes this move, but believes that the fine should be directly benefitting customers, not going to the treasury.

“We agree that Southern Water should be penalised and that the level is appropriate to the circumstances,” said David Bland, of the Consumer Council for Water. “Because customers suffered from Southern Water’s shortcomings we would have preferred a penalty which benefited them.”