Page last updated at 16:21 GMT, Tuesday, 8 April 2008 17:21 UK

Severn Trent faces a 35.8m fine

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Severn has eight million customers

Ofwat is proposing to fine Severn Trent Water 35.8m for providing false information deliberately and offering the company's customers a poor service.

The water industry regulator is fining the firm 34.7m, or 2.9% of total turnover, with a further 1.1m penalty for bad customer service.

It says it will cut bills by 2.40 a home for two years as a result.

Severn Trent also admitted misreporting water leakage levels in 2001 and 2002, after a Serious Fraud Office inquiry.

Severn Trent is likely to face a further fine from the criminal courts for the two counts of providing false information, to which it pleaded guilty.

The case has now been before the City of London Magistrates' Court, with the next hearing now set for the Old Bailey on 6 May.

'Unacceptable'

"Seven Trent Water's behaviour was unacceptable," said Ofwat chief executive Regina Finn.

We fully acknowledge and accept that the company is responsible for its failures
Tony Wray, chief executive Severn Trent

"The size of the fine reflects how seriously Ofwat takes the deliberate misreporting of information.

"This sends a clear message to the company and the rest of the water sector - Ofwat will protect consumers and companies must comply with their legal obligations or pay the price."

Tony Wray, chief executive of Birmingham-based Severn Trent Water's parent company Severn Trent PLC, said "a previous regime" at the firm was responsible.

'Promptly alerted'

"When my new management team and I uncovered misreporting and poor service in our customer relations department we promptly alerted Ofwat," added Mr Wray.

SEVERN TRENT WATER
8 million customers
Based in Birmingham
Serves customers across the Midlands

"And [we] took steps to implement proper controls and an ethical working culture with the highest standards to ensure there can be no repetition of this unacceptable behaviour.

"We fully acknowledge and accept that the company is responsible for its failures."

Mr Wray told the BBC that those responsible for providing the false information "are absolutely no longer with Severn Trent".

Severn Trent Water serves more than eight million customers from the Bristol Channel to the Humber, and from mid-Wales to the East Midlands.

Shares in Severn Trent PLC ended the day up 1p at 1445p on Tuesday.

Previous cases

This is not the first time that Ofwat has fined a water company for its provision of data and sub-standard customer service.

Back in February Ofwat fined Southern Water 20.3m, or 3.5% of its annual turnover, for poor service and reporting misleading figures.

It said that Southern Water had systematically manipulated information to hide its true service performance.

Southern Water chief executive Les Dawson said at the time that the announcement drew a line "under a shameful period in the company's history".

And last year, Thames Water was fined 12m, or 0.9% of its yearly sales, for "inadequate" reporting and customer service.


video and audio news
The firm was accused of hiding its true performance



SEE ALSO
Southern Water accepts 20m fine
08 Feb 08 |  Business
RBS sells Southern Water for 4bn
09 Oct 07 |  Business
Thames Water to be sold for 8bn
16 Oct 06 |  Business
Pulling the plug on wasting water
13 Aug 07 |  Science/Nature
Severn Trent moving headquarters
09 Oct 07 |  Coventry/Warwickshire
Ofwat to fine Thames Water 12m
28 Sep 07 |  Business

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