WATER SERVICES
REGULATION AUTHORITY News Release (21/08) issued by The Government
News Network on 2 July 2008
Ofwat today
confirmed that it has fined Severn Trent Water £35.8million for
deliberately providing false information to Ofwat and for
delivering poor service to its customers.
This breaks down as:
* £34.7 million (2.9% of 2006-07
turnover) for deliberately misreporting some key customer service
information; and
* £1.1 million (0.1% of 2005-06 turnover) for
providing sub-standard services to customers.
Ofwat Chief Executive Regina Finn said:
"Severn Trent Water's behaviour was unacceptable. The
size of the fine reflects how seriously Ofwat takes the deliberate
misreporting of information.
"This sends a clear message to the company and to the rest
of the water sector - Ofwat will protect consumers and companies
must comply with their legal obligations or pay the price. Any
further attempts to deliberately mislead Ofwat could lead to even
bigger fines in the future."
The obligations on the companies to provide reliable, accurate
and complete data are designed to protect consumers in a monopoly
environment. Without a choice of supplier, this protection is essential.
Severn Trent Water's shareholders will bear the entire cost
of this fine. 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 finance them.
2. Ofwat announced its proposals to fine Severn Trent Water for
deliberately providing false information to the regulator and
providing a poor service to its customers (see Press Notice
PN11/08, 8 April 2008).
3. Copies of Ofwat's notices imposing penalties on Severn
Trent Water are available on the Ofwat website, http://www.ofwat.gov.uk or from
the Ofwat Library by phoning 0121 625 1373. Representations were
received from the Consumer Council for Water and Severn Trent
Water which are detailed in the notices.
4. 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). Severn Trent Water's
regulated turnover for 2007-08 was nearly £1.3 billion.
5. 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 12-month period.
Additionally, it cannot impose a penalty in respect of any
contravention or failure before its powers came into effect on 1
April 2005. This penalty cannot therefore take account of the
full scale and duration of the failures that have been seen in
this investigation.
6. Ofwat fined Southern Water 3.6% of turnover (equivalent to
£20.3 million) for its deliberate misreporting of information and
its failure to meet customer service standards (see press notice
PN 02/08, 8 February 2008, which is available on the Ofwat website).
7. On 17 April 2008, Ofwat fined Thames Water 0.7% of turnover
(equivalent to £9.7million) for failing to provide robust
information and for poor customer service (see press notice PN
01/08, which is available on the Ofwat website).
8. The SFO prosecution of Severn Trent Water relates to two
offences of supplying false data about leakage to Ofwat and is not
connected to this investigation.
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