Southern Water has apologised for wastewater failings between 2010 and 2017 outlined by Ofwat this morning which saw the water regulator impose a record £126 million penalty on the utility - the water company said it was “deeply sorry for for the past failures.”

In a statement, Southern Water said that new management had worked closely with Ofwat since 2017 and was pleased with this comprehensive package which encompasses penalty, reparation for customers and assured improvement.

“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 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,” the statement says.

Southern Water is undergoing an ambitious transformation under its new CEO, Ian McAulay, who was appointed in 2017 to lead a transformation of the business.

The proposal from Ofwat includes a bill rebate over over the next five years to wastewater customers totalling £123m and a £3m fine – the customers will not bear any of the costs.

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. Ofwat’s key finding 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. The company said it 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.

Southern Water began investigating issues at its wastewater treatment sites in July 2016 before alerting Ofwat to deeper issues in March 2017.

Ian McAulay - “no excuses for failings that occurred between 2010 and 2017”

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

“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 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

CCWater – “Southern now has huge task on its hands to rebuild trust”

The Consumer Council for Water has separately responded to this morning’s announcement by the regulator.

Sir Tony Redmond, London and South East Chair for the Consumer Council for Water (CCWater), said:

“Customers of Southern Water will be absolutely appalled at the reckless disregard the company showed for the environment, which people care so much about. It also deliberately misled its customers, which is why it’s right the vast majority of the penalty is returned to bill payers who would have received most of this money had the company told the truth about its performance.”

“ Southern now has a huge task on its hands to rebuild the trust it has damaged.”