Ofwat yesterday published its proposals to fine Tendring Hundred 0.3% of its turnover – a total of £42,000 – for failing to provide the regulator with reliable, accurate and complete information. In September 2006 Ofwat published details of the accounting error that led to the company misreporting information in its June return 2006.

The error came to light during internal preparations for a report to Ofwat, and both the regulator and the Consumer Council for Water were immediately alerted. At the price review in 2004 Ofwat set price limits on the basis of the incorrect information. The error affected Tendring Hundred's revenue projections, which meant that its price limits for 2005-10 were incorrect, and led to its customers being overcharged. The error in price limits led to the average household customer paying around £14 more than they should have over the period 2005-07.  In April 2007 Tendring Hundred reduced bills by 7%, meaning customers had their overpayment refunded, plus interest.

Ofwat has issued a notice to fine Tendring Hundred Water Services £42k for the accounting error, which relates to turnover of £14 million in the 2007/08 financial year. In considering the overall penalty, Ofwat took account of the company's co-operation with the investigation, as well as the impact that the costs of investigating and rectifying the error have had on a company of its size. Statutory restrictions mean that Ofwat can only impose a financial penalty for a 12 month period.Tendring Hundred will bear the cost of the fine, which cannot be passed on to its customers.

Ofwat Director of Regulatory Finance and Competition, Keith Mason said:

"We take the matter of misreporting seriously. We can only regulate effectively and protect consumers if companies provide reliable, accurate and complete data

"There is no evidence of deliberate misreporting in this case. However, we are concerned that there were inadequate systems and controls in place at Tendring Hundred to identify such a substantial error. This meant that customers paid more than they should have."

Tendring Hundred Water, part of Veolia Environment, provides water supplies to 70,000 homes and businesses in north-east Essex.

In a statement Tendring Hundred Managing Director Nevil Muncaster said: “We apologise to our customers and very much regret what has happened.  Steps have been taken to ensure that this cannot happen again and I am satisfied that we have made amends for our mistake.  In addition to reimbursing customers, we have sought to help them by paying for a water efficiency expert who is helping customers to reduce their bills.  He is also working throughout the local community to promote water efficient, money saving measures in the home.

“For many years Tendring Hundred Water Services has consistently delivered good quality water services to customers and we continue to take pride in serving our local community.”

Representations about or objections to the proposals to impose a penalty on Tendring Hundred should be made by 10 September 2008 to Ingrid Olsen, Head of Enforcement Policy, Ofwat, 7 Hill Street, Birmingham, B5 4UA or by email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Penalties are paid into the Consolidated Fund and are not returned to customers.


Direct market competition in the regulated water and sewerageSectors in England and Wales  is very limited and Ofwat currently relies on its ability to make comparisons between undertakers to regulate effectively. If theinformation provided by undertakers is not reliable, accurate andcomplete, Ofwat's ability to regulate the industry is significantlyprejudiced. The information that undertakers furnish is also used todetermine price limits and misreporting of information can thereforehave a direct impact on customers' bills. The information which wasmisreported by Tendring Hundred in this case did have a direct impact

on price limits set for 2005-10 and hence on customers' bills.