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£20M fine for Southern Water

Ofwat have imposed a fine of £20.3M for deliberately reporting false customer service information up to 2005.

Ofwat Chief Executive Regina Finn said: "Southern Water deliberately misreported its customer service performance to Ofwat and systematically manipulated information to conceal the company's true performance over an extended period of time.

"The company benefited directly from this misreporting at the last two price reviews, meaning Southern was able to increase its prices by more than it should have done. Customers received higher than necessary bills because of the company's deception.

"Southern Water's shareholders will bear the entire cost of this fine. It will not be passed on to its customers. The magnitude of this fine reflects the magnitude of the offence – deliberately misleading the regulator, failure of the Southern Water Board of Directors to pick up the deception, the resulting poor service to customers and damage to the regulatory regime, in general."

Of the £20.3M fine, £19.8M - equivalent to 3.5% of 2006-07 turnover - is for deliberately misreporting information to Ofwat, while a further £470,000 - equivalent to 0.1% of 2004-2005 turnover - is for providing sub-standard services to customers by failing to meet Guaranteed Standards of Service.

Southern Water said in a statement that the a two-year investigation found the inaccurate reporting came from a project to install a new billing system, and response times reported to Ofwat did not match the actual performance.

Southern's chief executive Les Dawson said: "I understand Ofwat's intention to fine us for what happened in the past.

"Today, I would like to reassure customers that those historically entitled to guaranteed standards payments have now been paid and that we are well on course to meeting a service improvement plan agreed with the regulator."

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