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Ofwat fines Thames Water £9.7 million
Ofwat today has fined Thames Water 0.7% of turnover (£9.7 million) for misreporting information and delivering poor service to customers.
Ofwat is now publishing final notices penalising the company, after proposing to fine the company last September. Deficient systems and low business priority on reporting non-financial data led to the company misreporting customer service information. This damaged the regulatory process.
The fine breaks down to:
* 0.6% of 2006-07 turnover (£8.3
million) for misreporting information on customer service
and
* 0.1% of 2005-06 turnover (£1.4 million) for failing to
meet minimum service standards.
Ofwat Chief Executive Regina Finn said: "Thames Water's systems and processes were inadequate and customers lost out. The penalty reflects the importance we attach to reliable, accurate and complete information and gives a clear signal to both the company and the water sector that non-compliance is not a cheap or easy option."
Our investigation did not find any evidence of deliberate misreporting. Nor has the misreporting affected the bills that customers have received.
Thames Water's shareholders will bear the entire cost of this penalty. It will not be passed on to its customers.
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 each notice imposing a penalty on the company are available on the Ofwat website, http://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 Thames Water for misreporting and failure to meet customer service standards last September (Press Notice PN33/07). A Variation Notice was issued on 9 January 2008 (Press Notice PN01/08). In the 'proposal to fine' stage, Ofwat proposed a penalty on Thames Water of 0.8% of its turnover for misreporting information on its customer service performance. We sought representations on our proposals. After taking Thames Water's representations into account and its co-operation during this investigation, we have reduced the level of the penalty for misreporting. The penalty for failure to meet the minimum standards is as proposed in our January notice.
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).
7. Penalties are paid into the Consolidated Fund and are not returned to customers.
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