Southern Water facing £20.3m fine

Southern is refunding customers who overpaid

The water industry regulator, Ofwat, is planning to fine Southern Water £20.3m for "deliberately misreporting information" about its performance.

The misreporting meant that Southern was able to raise its prices by more than it should have done, Ofwat said.

The fine is also for poor processes and systems that meant "customers received poor service", the regulator added.

Southern's chief Les Dawson told the BBC the firm accepted the fine and was "really sorry" for the misreporting.

Southern Water provides water and waste-water services in Kent, Sussex, Hampshire and the Isle of Wight.

'Deception'

Southern Water uncovered issues with the reporting of service standards in October 2005, and reported them to Ofwat and the Serious Fraud Office (SFO).

We accept this fine - we have no arguments with it Les Dawson, Southern Water chief executive

The problems related to response times for billing inquiries and service complaints from customers.

According to Ofwat chief executive Regina Finn: "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," she added.

"Customers received higher than necessary bills because of the company's deception."

Ofwat noted that Southern Water had taken "prompt" action once it discovered the misreporting and is returning money to customers who paid higher bills than they should have done.

The SFO began an inquiry into the incident, but dropped it in April this year because of insufficient evidence for a criminal prosecution.

Paying back

Southern Water said it had repaid more than £500,000 to customers who had lost out and apologised for the misreporting.

"I don't think we feel hard done by," Mr Dawson told the BBC.

"In my view, the biggest crime you can ever have is to deceive your customers. Customers are the lifeblood of the business," he added.

"We accept this fine - we have no arguments with it."

Ofwat said that Southern's shareholders would bear the entire cost of the fine, and that it would not be passed on to customers.