Water services watchdog Ofwat has today (5 February) confirmed that Southern Water has completed all the enforcement actions resulting from its 2019 investigation into the company.
Those actions saw £126m paid in redress and penalties by the company, alongside improvements to the operation of its wastewater treatment works and its compliance and governance processes.
In 2019 Southern Water agreed to pay the £126million in penalties and rebate payments to customers following serious failures in the operation of its sewage treatment sites and for deliberately misreporting its performance during 2010-2017.
Investigation
In the course of a large-scale investigation into the water company, Ofwat found that Southern Water failed to operate a number of wastewater treatments works properly, including not making the necessary investment which led to equipment failures and spills of wastewater into the environment.
Ofwat also found that Southern Water staff manipulated the wastewater sampling process which resulted in misreporting information about the performance of a number of sewage treatment sites. This meant the company avoided penalties under Ofwat’s incentive regime.
Enforcement
Ofwat’s enforcement meant the company had to pay a rebate of £123m to customers through their bills and a fine of £3m.
The rebate includes £91m in penalties Southern Water had avoided and a further £32m of payments as recognition of their serious failures.
Further actions included completing a technical review of environmental permit compliance across all 293 wastewater treatment works. This uncovered more than 1,000 actions which have now been completed.
- Completing the works required to return 118 wastewater treatment works to compliance in line with environmental permits. This included completing work to ensure all storm tanks at wastewater treatment works are of the required capacity.
- Embedding routine inspections of all relevant wastewater treatment works into its business-as-usual practices.
- Improving the accuracy of its spills reporting, improving the coverage of storm overflow monitoring (EDM), ensuring greater visibility of spills by the company.
- Completing organisational cultural changes, including an annual review of incentive schemes for executives and senior management to ensure they do not drive inappropriate behaviours with respect to compliance.
Ofwat’s latest assessment of Southern Water’s compliance has confirmed that whilst it has met the commitments made in 2019, it needs to go further in areas that were not a focus of the previous investigation to fully meet the standards that the law sets out. Southern Water has committed to additional undertakings that will bring it into compliance with these standards.
More to do
The company will now develop and deliver a remediation plan to complete the outstanding work required. Southern Water’s shareholders had already committed £11.5m of targeted investment towards the types of improvements needed, in addition to wider work within the company’s business plans.
Following Ofwat’s latest assessment, an additional £2m of shareholder funding will be provided bringing investment to a total of £13.5m for work that will be completed by 2030. None of this money will be funded by customer bills.
This money will include a contribution of £2 million to support wetland restoration at Nursling, Southampton and a £5.5 million investment in Southern Water’s sewer level monitor programme.
Lynn Parker, Senior Director for Enforcement at Ofwat, said: “While we are pleased that Southern Water has completed the work resulting from our previous investigation, the company must now continue this journey to secure its wider compliance, as set out in these further commitments.
“Ofwat understands that the public wants to see transformative change. That is why we ensure companies deliver on the work they commit to as part of our enforcement decisions, as we have done in this case with Southern Water. This is just one of the ways we are holding companies to account and ensuring that they meet their obligations.”
‘Transformation’
A Southern Water spokesman said: “We welcome Ofwat’s recognition of our transformation since our own investigations identified failures in our reporting of environmental performance. As well as investment in key sites and assets, we’ve undergone a root and branch change of culture, systems and processes, led by a new management team.
“Of course we have more to do to improve our environmental performance, but progress is being made – since 2020 we’ve reduced total pollutions by more than 40 per cent.”
The new work undertaken includes wetland restoration and the increased rollout of AI-based sewer and systems monitoring. It is being funded by £13.5 million from shareholders, not from customers.
Where did/will the £126m come from originally: From the paying customers of course and not the shareholders. Yet again the paying customers will be paying an increase in water charges in order for SW to update their systems that the £126m could have paid for. Its about time rather like National Rail that all the water companies were nationalised.
I agree it’s us the customers that will pay in the end.
Public ownership of water and sewage services is a no-brainer! Just get on & do it,Government!
Unfortunately I wouldn’t trust this government to organise a p##s up in a brewery.
Keith Venus’s – and you naively believe this bunch of liars and indecisive clowns would manage our water services! You will be telling next TDC are capable of fiscal restraint!