| Ofwat confirms Severn Trent Water fine |
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| Written by Adrie van der Luijt | |
| Wednesday, 02 July 2008 | |
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Ofwat has confirmed a £35.8m fine for Severn Trent Water for deliberately providing false data.
This breaks down as £34.7 million (2.9 per cent of 2006/07 turnover) for deliberately misreporting some key customer service information and £1.1 million (0.1 per cent of 2005/06 turnover) for providing sub-standard services to customers Unacceptable behaviour Ofwat chief executive Regina Finn said that Severn Trent Water's behaviour was unacceptable and that the size of the fine reflects how seriously Ofwat takes the deliberate misreporting of information. "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," she warned. 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. The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. 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. Consolidated Fund A financial penalty may not exceed 10 per cent of the company's turnover. Severn Trent Water's regulated turnover for 2007-08 was nearly £1.3 billion. 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. Ofwat fined Southern Water 3.6 per cent of turnover (equivalent to £20.3 million) for its deliberate misreporting of information and its failure to meet customer service standards. On 17 April 2008, Ofwat fined Thames Water 0.7 per cent of turnover (equivalent to £9.7million) for failing to provide robust information and for poor customer service. A separate Serious Fraud Office (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. Related articles
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