Water regulator Ofwat on Friday fined Southern Water £20.3m ($39.5m) for misreporting data and poor customer service, saying the company would not be allowed to pass on the cost of the fine to customers.
Southern Water accepted the fine. Les Dawson, the group’s chief executive, 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 and once again we apologise to our customers.”
The problems at Southern Water were uncovered in 2005 by the new management team, which found that figures submitted to Ofwat on the group’s response times to customer queries had been wrong. This meant that some customers had not received compensation that they were owed.
Regina Finn, Ofwat chief executive, said: “Southern Water behaved unacceptably in deliberately misreporting customer service performance to Ofwat and systematically manipulating information to conceal its true performance over an extended period of time.”
Southern Water was last year bought for £4.2bn by Australia’s Challenger Infrastructure Fund and JPMorgan Asset Management, and the new owners will have to absorb the cost of the fine.
At the time of the misreporting of data, Southern Water was owned by the Royal Bank of Scotland. But Mr Dawson said on Friday that the previous owners did not know “of the deception that took place”.
The company has agreed with Ofwat to cut water bills, as they are higher than they should have been as a result of the misreporting.
From April 2007 to April 2009, Southern Water will keep its annual price increase below the level allowed by Ofwat, refunding an average of £10 per customer in total over the three years.
Ofwat is deciding whether to fine Thames Water for “neglect” in reporting non-financial data and “damaging the regulatory process”.
Severn Trent Water, meanwhile, is waiting to be charged by the Serious Fraud Office for allegedly misreporting leakage data.
Ofwat is also likely to fine Severn Trent for inaccuracies in its customer service information, with analysts expecting a penalty of up to £50m.