The start of the new financial year has heralded rebate payments to customers by Southern Water as part of the settlement reached with Ofwat last year following a large-scale investigation into the water company.

The water company is reducing wastewater charges to existing customers and making payments to eligible former customers totalling £123 million over the next five years.

Southern Water agreed to pay a total of £126 million, including a fine of £3 million, in penalties and payments to customers following serious failures in the operation of its sewage treatment sites and for deliberately misreporting its performance.

For existing customers, this will be in the form of a bill reduction starting on April 1st 2020. In the first year, this will be approximately £14 per customer. In the following four years it will be approximately £9.

Ian McAulay, Southern Water’s Chief Executive, said:

“Since 2017 we have been working very hard to understand past failings and implement the changes required to ensure we deliver better services for our customers and meet the standards they expect and deserve.”

“There are no excuses for the failings that occurred between 2010 and 2017 outlined in Ofwat’s report published last summer, however we are fully committed to continuing the fast pace of change delivered since 2017 and regaining the trust of our wastewater customers and the wider communities we serve.”

In the course of its investigation the water sector regulator found that Southern Water had failed to operate a number of wastewater treatments works properly, including by not making the necessary investment which led to equipment failures and spills of wastewater into the environment.

Ofwat also found that Southern Water had manipulated its wastewater sampling process which resulted in it misreporting information about the performance of a number of sewage treatment sites. This meant the company avoided penalties under Ofwat’s incentive regime.  

Southern Water said that it is a “substantially different” company today and had already made a number of fundamental improvements which had been recognised by regulators.

The improvements include:

• A complete restructure of the Executive Team and Board
• Invested £26m in wastewater sites over the past year – with a 5 year plan overspend funded by shareholders of £150m to transform the business.
• Southern Water fully supported the investigations and simultaneously completed its own extensive internal review, which highlighted failures of people, processes and systems during that period.
• One of the only organisations in the sector to have developed a pollution reduction programme based on data analysis of all sites.
• 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 appointed 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.

The water company believes it now has a better understanding than ever before of what can go wrong and why - and has taken steps to improve its systems and processes to make sure the same issue does not occur twice.

Southern Water teams have also been through rigorous training – the utility said its 24/7 response 365 days a year is stronger, quicker and more resilient than in the past.

In addition, it is also increasing transparency about its environmental performance, including providing more detail about releases near bathing waters, as well as more frequent reporting about pollutions performance and wastewater treatment compliance.