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Southern Water's shareholders will bear the entire cost of this fine. It will not be passed on to its customers. Ofwat Chief Executive Regina Finn 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 and the company has acknowledged this." The obligations on the companies to provide accurate and reliable data are designed to protect consumers in a monopoly environment. Without a choice of supplier, this protection is essential. "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," said Ms Finn. Notes to Editors: 1. The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. It exercises its powers in a way that it judges will protect the interests of consumers, promote value and safeguard future water and sewerage services by allowing efficient companies to carry out their functions properly, and to finance them. 2. Copies of the 'Notice of Ofwat's imposition of a penalty on Southern Water Services Limited for breaches of its Conditions of appointment in respect of regulatory reporting - Deliberate misreporting' and 'Notice of Ofwat's imposition of a penalty on Southern Water Services Limited for failures to meet standards of performance prescribed under the GSS Regulations' are available on the Ofwat website, www.ofwat.gov.uk or from the Ofwat Library by phoning 0121-625 1373. 3. Customer service performance data allows Ofwat to identify best practice, incentivise companies to improve performance and take any necessary action where companies fall below acceptable standards. 4. Companies have a duty under their licences to ensure that the information they provide to Ofwat is reliable, accurate and complete. This allows Ofwat to compare information across the industry and fulfil its regulatory duties. This is essential where customers have no choice of supplier. 5. Ofwat announced its proposals to fine Southern Water for deliberate misreporting and failure to meet customer service standards (see Press Notice PN42/07, 14 November 2007). The regulator is fining Southern Water a total of £20.3 million. This breaks down as follows: 6. A financial penalty may not exceed 10% of the company's turnover as set out in Water Industry (Determination of Turnover for Penalties) Order 2005 (SI 2005/477). Southern Water's regulated turnover for 2006-07 was £566.8m. The company's regulated turnover for 2004-05 was £467.6 million. 7. The economic regulator has confirmed its proposal to impose the penalty, which was set out on 14 November 2007 and followed by a 28-day consultation period. Southern Water did not make any representations during the consultation on the initial proposal, but the company has the right to appeal to the courts if it disagrees with the amount of the fines or the imposition of the penalties. 8. Penalties are paid into the Consolidated Fund and are not returned to customers. The requirements of the Water Act 2003 mean Ofwat may only impose a penalty covering a twelve-month period. It cannot impose a penalty in respect of any contravention or failure before its powers came into effect on 1 April 2005. The penalty proposed cannot therefore take account of the full scale and duration of the failures that have been seen. 9. Statutory restrictions mean Ofwat can only impose penalties for two specific one-year periods. Southern has already reduced its prices to return the money it should not have received at the 2004 price review. Bills will be reduced in 2008-09 to return the money it should not have received at the 1999 price review. 10. Media enquiries to Ofwat Press Office on: 0121 625 1496/1416/1442.  | ||||||
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