Southern Water hit with record £126m penalty after ‘serious failures’

British water and power firms are trying to soothe nerves over nationalisation in the event of a Labour government,it is exactly incidents like the blatant disregard for both its customers and the environment carried out by Southern Water that strengthens the nationalisation argument. Southern Water let down its customers and operated in a way completely counter to the public expectations.

Jeremy Corbyn has said the state would take control of water, electricity, gas and railway operators, as well as the Royal Mail and the Royal Bank of Scotland if Labour wins power.

The privatisation of utilities, which began in the 1980s under Margaret Thatcher, has been a divisive issue. While supporters say consumers get a better deal, critics argue that there is no place for profit in public services.

The argument of a better deal fails when we see corporations acting in such a way that Ofwat found that the company “manipulated” its wastewater sampling process, resulting in the misreporting of its performance and the subsequent evasion of penalties from the regulator.

“It was not just the poor operational performance, but the co-ordinated efforts to hide and deceive customers of the fact that are so troubling,”

Now, with Labour gaining in the polls and a general election seen as more likely following a delay to Brexit, companies and investors are taking the possibility of nationalisation seriously.

Southern Water has agreed to pay a record £126m in fines and payments to customers for “serious failures” in its sewage treatment works and for deliberately misreporting its performance.

Water regulator Ofwat discovered wastewater spills into the environment caused by faulty equipment and a lack of necessary investment by the company. In addition, Ofwat found that Southern Water manipulated its wastewater sampling process, which helped it mask the poor performance of a number of sewage treatment sites and avoid penalties.

The Environment Agency is also investigating Southern Water and expects to start court proceedings soon.

“What we found in this case is shocking,” said Ofwat chief executive Rachel Fletcher. “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 co-ordinated effortsSome £123m of the fine will be returned to customers through their bills over the next five years.

Proportionate to the size of Southern Water’s business, the package of penalties — which also includes a £3m fine — is the biggest ever imposed by Ofwat.

A two-year investigation into the company found that Southern Water failed to operate a number of its wastewater treatment plants properly, including by not making the necessary investment in its facilities.

This led to equipment failures and the spillage of wastewater into the environment, Ofwat said on Tuesday.

It also found that the company “manipulated” its wastewater sampling process, resulting in the misreporting of its performance and the subsequent evasion of penalties from the regulator.

It was not just the poor operational performance, but the co-ordinated efforts to hide and deceive customers of the fact that are so troubling,

 

Ofwat CEO Rachel Fletcher said on Tuesday.

“The previous management failed to stamp out this behaviour and failed to manage its plants properly. In doing so, Southern Water let down its customers and operated in a way completely counter to the public service ethos we expect.”

The fine would have been larger had Southern Water not cooperated with Ofwat’s investigation, addressed its failings, and agreed to the package of penalties, the regulator said.

In a statement, Southern Water said it was “profoundly sorry for these failures.”

“We have fully supported these investigations and completed our own internal review, which has highlighted failures of people, processes, and systems during that time.”

Its customers should expect a rebate on their bills of £61, with £17 coming in 2020-21 and £11 in each of the following four years.

Southern Water has also introduced new governance arrangements and a programme to change the company culture that had enabled these failings, Ofwat said.

Ofwat noted it had not investigated the environmental impact of Southern Water’s actions. The Environment Agency is separately investigating the company. to hide and deceive customers of the fact that are so troubling.”