Working with Ofwat to rebate our customers

Ian McaulaySince June 2017, our wastewater treatment compliance has been under investigation by Ofwat due to breaches of our licence conditions and statutory obligations during the period from 2010 to 2017.

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

We are profoundly sorry for these failures and have been working very hard to understand past failings and implement the changes required to ensure we better deliver for our customers and meet the standards they deserve.

Ian McAulay
Chief Executive

What happened

In January 2017, Ian McAulay met with Ofwat to discuss the issues we were facing, after the EA started an investigation into a small number of our wastewater treatment sites.

In June 2017, our regulator Ofwat started an investigation into possible breaches of licence conditions and our statutory reporting obligations relating to the management and operation of our wastewater treatment works.

We immediately started our own internal review and discovered a problem with sampling processes at some of our sites which means that we need to restate our wastewater performance for the period 2010–17. The findings of our own review have been shared with our regulators at every stage.

What this means

The Ofwat investigation has since resulted in an enforcement action against us. To reflect the seriousness of the breaches identified, Ofwat has issued us with a financial penalty of £3 million.

In addition, we have agreed to make significant customer bill rebates, totalling £123 million*, between 2020–25, in recognition of our failure to meet the expectations of our customers and wider stakeholders, as well as our regulators.

This total will be made up of a rebate of £111.7 million*, to be broken down and shared in equal amounts with customers over the next five years, from 2020 to 2025, together with a customer bill rebate of £11.2 million*, which will be made during 2020–21. This will provide a bill rebate of £61 per household* over the next five years.

*In 2017–18 prices, actual amount may increase with inflation

How we're improving

We know that a number of failures of people, processes and systems allowed these breaches to occur and we have acted promptly and decisively to make sure that all of the issues identified in the investigation have been addressed.

This has involved making fundamental changes to the way we operate. Over the past two years these changes have included a full company restructure, a new executive team and a strengthened Board.

We have also put new systems in place to safeguard our services, our whistle-blowing procedures have been enhanced, and a revised set of company values have now been embedded.

These actions, along with a modern compliance framework, are already changing the culture in Southern Water.

Follow the link to read our new Code of Ethics.

Customer questions & answers

Households that pay wastewater charges will be eligible. We’ll contact you with further details nearer the time.

We'll pay each eligible household back £61* in total over five years, starting from April 2020.

*In 2017–18 prices, actual amount may increase with inflation

We worked closely with our regulator Ofwat, which set the terms of how and when we can rebate customers.

No. Customers will bear none of the costs of the proposed fine or rebate.

No, because the package accepted by Ofwat is for us to rebate households from April 2020 until March 2025. So only Southern Water customers during this period will receive a rebate.

Yes. We'll be working closely with South East Water to ensure each household receives a rebate on their wastewater charges from April 2020 until March 2025.

Yes, because each household will receive a rebate from April 2020 until March 2025. So if you're a Southern Water customer during this period, you'll receive a rebate.

Yes, because each household will receive a rebate from April 2020 until March 2025. So if you're a Southern Water customer during this period, you'll receive a rebate.

Yes, because each household will receive a rebate from April 2020 until March 2025. So if you're a Southern Water customer during this period, you'll receive a rebate.

All households that pay wastewater charges will be eligible. Each household will receive a rebate from April 2020 until March 2025. So if you're a Southern Water customer during this period, you'll receive a rebate.

No, because each household will receive a rebate from April 2020 until March 2025. So if you’re a Southern Water customer during part of this period you will receive a partial rebate.

We’re sorry, but because the rebate is tied to our wastewater pricing, only households that pay wastewater charges will be eligible.

The raw unvalidated spill data that Ofwat refer to in the report is not a record of pollutions.

The Environment Agency is conducting a separate investigation into suspected permit breaches at a number of our wastewater treatment works. We have been collaborating with the EA since its investigation began in July 2016 and all of the information provided to Ofwat has been shared with the EA. As this is an ongoing investigation, both ourselves and the Environment Agency are very limited on what we can share publicly.

Business questions & answers

Businesses that pay wastewater charges from April 2020 until March 2025 will be eligible.

We'll be working closely with retailers to ensure businesses receive a rebate. Further details will become available nearer the time.