Ofwat is now publishing final notices penalising the company, after proposing to fine the company last September. Deficient systems and low business priority on reporting non-financial data led to the company misreporting customer service information which damaged the regulatory process.
The fine breaks down to: 0.6% of 2006-07 turnover (£8.3 million) for misreporting information on customer service and
0.1% of 2005-06 turnover (£1.4 million) for failing to meet minimum service standards.
Ofwat Chief Executive Regina Finn said: "Thames Water's systems and processes were inadequate and customers lost out. The penalty reflects the importance we attach to reliable, accurate and complete information and gives a clear signal to both the company and the water sector that non-compliance is not a cheap or easy option."
Our investigation did not find any evidence of deliberate misreporting. Nor has the misreporting affected the bills that customers have received.
Thames Water's shareholders will bear the entire cost of this penalty. It will not be passed on to its customers.”
Ofwat said it intended to reduce its previous proposed figure of £12.5 million to £9.7million in recognition of Thames Water's earlier representations and its co-operation with Ofwat's investigations.
Thames Water welcomed the decision by the regulator to reduce the level of fine. In a statement Thames Water Chief Executive David Owens said:
"We are pleased that Ofwat have accepted our representations on the level of the fine. This is still a high figure considering that the failures were unintentional, rather than deliberate, but we welcome the reduction.
"Although all the misreporting took place under previous ownership and management, we always acknowledged the company should be held account for these failings, but argued any penalty should be proportionate to the harm done to our customers and the efforts we had taken to make amends.
"We not only accepted responsibility for the errors, alerting Ofwat as soon as we became aware of them, but also voluntarily took all appropriate steps to investigate and rectify the failings and to compensate customers over and above the statutory requirements."
Following Ofwat's announcement the Consumer Council for Water expressed surprise that Ofwat has decided to reduce the fine, and said it was disappointed that the money will go to the Treasury, rather than to benefit consumers.
According to the CCW, any water company that breaks the rules must be penalised and dealt with in the strongest way possible in a way which will benefit consumers at the same time.
Commenting on the fine, Dame Yve Buckland, National Chair of the Consumer Council for Water, said:
"Penalties can and should directly benefit consumers, and make it very clear to companies that breaking the rules will not be tolerated. Where penalties occur, consumers should benefit first. They should not be just another source of income for the Treasury.
"As a minimum, Thames Water needed to get their reporting systems in order and compensate the customers who had been affected. We have serious concerns over the number of water companies being investigated or fined by Ofwat, especially when consumers do not see some benefit at the end of the process.
"The incidents of companies misreporting, deliberate or not, have had a serious negative effect on consumers' views of the water industry and companies will need to work hard to restore their credibility."