The water industry was privatised and at the same time it was 'made more business like'. This was achieved by large scale computerisation and centralisation of data. In effect this stripped data away from the people who understood how it was made and what it related to, and most important, how it related to the effluent and the other natural things that make up the water industry. The experienced workforce was effectively replaced by large computerised data base that fed into the newly created call centres. There was a mass stripping away of knowledge from the people working with stuff, and a movement of data to computers, and to people who knew more or less how to operate them. In effect the link between information and the people who are responsible for keeping it real was broken. In the news we don't find an analysis of the detail of reality, instead we find sensational accounts which presume to know the shortcomings of people involved.
Mark Milner, industrial editor
The Guardian
Thursday November 15 2007
Water industry regulator Ofwat yesterday announced plans to fine Southern Water £20.3m for misreporting and poor service. The fine is the biggest imposed by the watchdog under powers which came into effect in 2005. The previous record was a £12.5m fine slapped on Thames Water this year.
Southern, which was bought for £1.3bn last month by a consortium of infrastructure investors, said it accepted the punishment. "Southern Water fully acknowledges Ofwat's requirement to fine the company for its misreporting of customer service performance and failure to make all guaranteed standards payments," the company said in a statement.
Regina Finn, Ofwat chief executive, 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."
As a result customers missed out on payments they were entitled to for service failures and were overcharged.
Southern Water, which serves some 2.3 million water and 4 million waste water customers, itself discovered the irregularities as it was introducing a new billing system. It reported its own findings to both Ofwat and the Serious Fraud Office.
Yesterday Ofwat acknowledged Southern Water's action and its cooperation with the investigation. However, Finn noted: "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."
The fine will be paid by Southern Water's shareholders and cannot be passed on to customers.
Ofwat said it only had powers to impose a fine for two specific one-year periods even though the problems went back to before 2000 and Southern had received money it should not have done in the 1999 and 2004 price reviews.
It could have imposed fines of up to 10% of turnover, which would have amounted to more than £100m, but opted for a sanction of 3.5% of turnover for the deliberate misreporting and 0.1% for providing sub-standard services to customers by failing to meet guaranteed levels of service.
Southern Water said it had reduced bills this year and would do so again next year to repay the money to customers. A spokeswoman said the overcharging amounted to an average of £1.50 a year over seven years.
Les Dawson, Southern Water's chief executive, said: "I understand Ofwat's intention to fine us for what has 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."
http://www.guardian.co.uk/business/2007/nov/15/southernwater?gusrc=rss&feed=networkfront
The scale of the fine imposed by Ofwat, which is subject to a consultation process over the next five weeks, met with general approval.
David Bland, chairman of the Consumer Council for Water Southern and Thames, said: "We believe that the level of the fine is appropriate to the circumstances. We are also pleased to note that Southern Water's shareholders will bear the entire cost of the fine, which should not fall on the customers who were badly served under the previous management.
"Because customers suffered from Southern Water's shortcomings we believe that the £20.3m fine should be used for the benefit of customers as opposed to being paid to the Treasury.
"Southern Water has accepted the fine and the Consumer Council for Water will work with them to put in place their service improvement plan as agreed with Ofwat."
Tim Wolfenden, head of home services at uSwitch.com, the independent price comparison and switching service, said: "The priority here is to ensure that consumers are fully recompensed, and Ofwat does seem to have this well in hand. The regulator has made it clear that shareholders rather than customers will be footing this bill. However, it could go one step further and prescribe what should be done with the fine - the icing on the cake would be to see this £20.3m fine invested directly into improving our worn out water systems. This would serve everybody's interests best."
