Severn Trent faces a �35.8m fine

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 Check Severn Trent's shares Send us your comments

"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.

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