United Utilities given £8.5m fine

United says it now has a new management team in place

Water firm United Utilities has been given a £8.5m fine from water regulator Ofwat for breaching trading rules.

Ofwat imposed the penalty, the first of its kind, after the North West-based firm "repeatedly breached its licence" for failure to "market check".

Market checking ensures a firm assesses the services it uses are the best value for money, so that customers pay no more than necessary.

Ofwat said the fine sent a message that firms must obey their licence terms.

This fine of £8.5m sends a strong message to United Utilities Water and the rest of the water industry that they must comply with their licence conditions Regina Finn, Ofwat chief executive See United Utilities' shares

Under its licence United Utilities Water is obliged to "market test for services that it procures from companies within the United Utilities group".

Ofwat said the fine, first proposed in April, would be met by United's shareholders and paid to the government. The regulator based the fine on £95m in trading between the utility and its own companies in the year-and-a-half to March 2007.

Ofwat said the fine covered the utility's deals with its associate companies, including installing and maintaining water meters without testing its prices in the wider market.

United has said that it is making strong progress - under a new management team - to address Ofwat's concerns by competitively tendering relevant services.

Regina Finn, Ofwat chief executive, said: "This fine of £8.5m sends a strong message to United Utilities Water and the rest of the water industry that they must comply with their licence conditions."