Investigation into Southern Water’s wastewater treatment sites and the company’s reporting of relevant compliance information to us

Summary of case

Since June 2017 Ofwat has been investigating whether Southern Water has breached its statutory duties and licence obligations, which fall under our remit to enforce. The investigation has looked at the performance of its wastewater treatment sites, and the company’s reporting of relevant compliance information to us.

Summary of Ofwat’s final decision

Our investigation found that Southern Water had contravened the following statutory and licence provisions in relation to the management of its wastewater treatment works (“WwTW”) and the reporting of performance information to us in respect of those WwTW, relating to the 2010-15 and 2015-20 price control periods:

  • Paragraph 9.2 of Condition B and/or paragraph 1 of Condition M of its instrument of appointment (“Licence”), by deliberately misreporting information about its WwTW performance for the period 2010-15, provided to us in February 2016;
  • Paragraph 1 of Condition M and/or the Regulatory Accounting Guidelines (“RAGs”) (version 3.08) issued under Condition F of its Licence, by deliberately misreporting information to us about its WwTW performance in its Annual Performance Report for the years 2015-16, 2016-17 and 2017-18;
  • Paragraph 13 of Condition I of its Licence in relation to the adequacy of its resources and systems of planning and internal control to enable it to properly carry out its regulated activities, particularly in relation to its obligations under section 94(1)(b) of the Water Industry Act 1991 (“WIA91”); and
  • Section 94(1)(b) of the WIA91 in relation to Southern Water’s duty to make provision for dealing effectually, by means of sewage disposal works or otherwise, with the contents of the sewers in its sewerage system.

On 25 June 2019 we published a notice of our proposal to impose a penalty on Southern Water amounting to £3million. This was in light of the company’s proposed package of financial and non-financial commitments, including returning £123m to customers. We are required to provide an opportunity for interested parties to make representations on our intention to impose a penalty. Having considered the responses we received and after securing further commitments from Southern Water on the back of those consultation responses, on 10 October 2019, we published a notice confirming that we had imposed a £3million penalty on Southern Water. We also published the undertaking Southern Water has provided to us under section 19 of the Water Industry Act 1991. This formalises the package of commitments it has provided.

Key publications

Ofwat’s final decision to impose a financial penalty on Southern Water Services Limited (10 October 2019)

Southern Water section 19 undertaking  (9 October 2019)

Notice of Ofwat’s proposal to impose a penalty on Southern Water Services Limited  (25 June 2019)

Announcements

PN 21/19: Ofwat confirms Southern Water will pay £126m following investigation (10 October 2019)

PN 12/19: Southern water to pay £126m following Ofwat investigation (25 June 2019)

PN 07/18: Ofwat statement on Southern Water investigation (2 February 2018)

Relevant powers

Section 18 – 22 of the Water Industry Act 1991

Date opened

21 June 2017

Date closed

10 October 2019.

Enquiries

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