- We are deeply sorry for the past failures outlined in Ofwat’s Notice
- We are fully committed to continuing to improve our business to deliver the standards our customers deserve
- New management has worked closely with Ofwat since 2017 and is pleased with this comprehensive package which encompasses penalty, reparation for customers and assured improvement
- The proposal from Ofwat includes a bill rebate over five years of £123m* and a £3m fine and customers will not bear any of the costs
- The package of measures with Ofwat deals with these failings and ensure that the ongoing improvements and investments we are making are being implemented in a timely way and with the right level of assurance from our regulator
- Southern Water is undergoing an ambitious transformation under our new CEO, Ian McAulay, who was appointed in 2017 to lead a transformation of the business. While there is still a lot to do, we are making good progress
Southern Water is pleased to agree with Ofwat a comprehensive agreement which encompasses penalty, reparation for customers and assured improvement. New management has worked with Ofwat closely on this issue since 2017. Today’s proposal from Ofwat includes a bill rebate to wastewater customers over the next five years totalling £123m* and a £3m fine.
As previously announced, Southern Water’s wastewater treatment compliance has been under investigation by Ofwat since June 2017 due to breaches of licence conditions and statutory obligations during the period from 2010 to 2017. Southern Water began investigating issues at its wastewater treatment sites in July 2016 before alerting Ofwat to deeper issues in March 2017.
The key finding from Ofwat is that between 2010 and 2017 some of Southern Water’s waste water treatment sites were manipulated by staff to pass sampling tests they otherwise might have failed.
Southern Water has fully supported these investigations and has simultaneously completed its own extensive internal review, which highlighted failures of people, processes and systems during that period.
Ian McAulay, Southern Water’s Chief Executive, said: “In 2017, I was brought in to drive change and transformation. Since then we 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.”
“We are deeply sorry for what has happened. There are no excuses for the failings that occurred between 2010 and 2017 outlined in Ofwat’s report. We have clearly fallen far short of the expectations and trust placed in us by our wastewater customers and the wider communities we serve.”
“We are fully committed to continuing the fast pace of change delivered since 2017. There is a lot more work to do but we’re pleased that this proposal agreed with Ofwat enables us to fully make amends to our customers and regain their trust as quickly as possible.”
Extensive transformation underway
Southern Water is substantially different today and has already made a number of fundamental improvements which have been recognised in the Ofwat report, including:
- A restructure of the Executive Team and Board
- Appointment of a new Director of Risk and Compliance to challenge front-line teams
- Introduction of an industry-standard ‘three lines of defence’ model for regulatory reporting
- Increased reporting to Ofwat for greater scrutiny
- Strengthened whistle-blowing policies and appointment of an independent adjudicator so that any colleague with concerns feels confident that they will be listened to
- Enhanced compliance across all wastewater treatment works including compulsory compliance and Code of Ethics training for all relevant colleagues
- Refreshed company vision, values and purpose which support and align to a modern compliance framework
- More than £100m invested in IT systems and processes and £26m invested in wastewater assets
Southern Water failed its customers and is resolutely committed to the agreed package of measures agreed with Ofwat to deal with these failings and ensure that the ongoing improvements and investments we need to make are being implemented in a timely way and with the right level of assurance from our regulator.
- Ofwat proposes a £3m penalty, which Southern Water accepts
- Southern Water will make rebates totalling £123m*
- Customers will receive the rebate in bills over the next five years
- This will mean the rebate will be at least £17* per customer to be rebated in 2021, and at least £11* per year for the following four years
- Customers will bear none of the costs of the proposed fine or rebate
- A robust and challenging Action Plan has been agreed with Ofwat and is now in place to ensure the Company’s technical compliance levels meet the highest standards
*In 2017–18 prices, actual amount may increase with inflation
More information: https://www.southernwater.co.uk/ofwat-investigation
Environment Agency investigation
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.
Notes to Editors
Southern Water is one of the largest water and wastewater companies in the South East of England.
It supplies 532 million litres of drinking water every day to more than two million customers and treats and recycles 717 million litres of wastewater for more than four million customers in Kent, Sussex, Hampshire and the Isle of Wight.
Water is essential to every aspect of our lives – for drinking, cooking and cleaning. Southern Water is proud to be at the heart of managing water and wastewater services. However, the South East’s water supply faces big challenges. The population of the region is growing fast, and climate change will bring droughts and more extreme weather. It’s a future of more people needing water and wastewater services, with less water to go around.
Southern Water’s vision is to create a resilient water future for customers in the South East. Its purpose is to provide water for life to enhance health and wellbeing, protect and improve the environment and sustain the economy. That’s why it is acting now for the challenges ahead.
Find out more about Southern Water: www.southernwater.co.uk