In the course of a large-scale investigation into the water company, regulator Ofwat found that the company had not made the necessary investment into its infrastructure which led to equipment failures and spills of wastewater into the environment.
Ofwat also found that Southern Water manipulated its wastewater sampling process which resulted in it misreporting information about the performance of a number of sewage treatment sites.
This meant the company avoided penalties under Ofwat’s incentive regime.
The £126m package will see Southern Water pay a rebate of £123m to customers through their bills and pay a fine of £3m.
The rebate includes £91m in penalties Southern Water had avoided and a further £32m of payments as recognition of their serious failures.
Southern Water wastewater customers should expect a rebate on their bills of £61, with £17 in 2020/21 and £11 in each of the following four years.
This package of penalties and payments is the biggest Ofwat has ever imposed.
‘What we found in this case is shocking,’ said Ofwat Chief Executive, Rachel Fletcher.
‘In all, it shows the company was being run with scant regard for its responsibilities to society and the environment.
‘It was not just the poor operational performance, but the co-ordinated efforts to hide and deceive customers of the fact that are so troubling.
‘The previous management failed to stamp out this behaviour and failed to manage its plants properly.
‘In doing so, Southern Water let-down its customers and operated in a way completely counter to the public service ethos we expect.
‘That is why the company deserves such a significant sanction.
Southern Water chief executive Ian Macauley said: ‘We are profoundly sorry for these failures and have been working very hard to understand past failings and implement the changes required to ensure we better deliver for our customers and meet the standards they deserve.’