Water giant faces £8.5m fine

The water regulator is to fine United Utilities £8.5m for repeatedly breaking trading rules over the 2005-2007 period.

The water supplier for the North West region has repeatedly over-inflated the prices it pays its own subsidiaries to push up costs, thus potentially enabling it to charge its 2.9m customers more than its licence conditions allow.

UU never actually managed to overcharge customers, however – the company was caught in the act each time as it repeatedly tried the same trick to inflate costs over a ten year period, Ofwat said. The penalty only covers the last two years as Ofwat acquired powers to fine in April 2005, it said.

MPs urged Ofwat to get tougher with rule-breakers earlier this year, and are likely to say the proposed £8.5m fine – equivalent to 0.7% of the company’s annual income – is not high enough.

The Consumer Council for Water, representing water customers in England and Wales, said the fine was on the low side but that it would only comment fully in the consultation over the proposed £8.5m fine.

“It’s a figure that – considering what’s been going on – is maybe not as bad as people would have thought,” a spokesperson for CC Water told edie. But it is “a bit too early to make judgements,” she said.

“We do welcome the action that Ofwat has proposed because even though customers have not been disadvantaged, it’s good to know there is a signed internal process that’s going on and that companies like Ofwat are doing what they should,” she added.

Ofwat Chairman Philip Fletcher insisted that the proposed fine was “proportional to the offence.”

“We take these breaches very seriously. Our job as regulator is to protect customers by ensuring they pay the minimum necessary for high quality sustainable water services.

“We have warned United Utilities Water over several years and reduced their price limits at successive reviews to protect customers. Despite this the company has continued to trade with associates in a way that if left unchecked has the potential to harm customers’ interests.”

The fine “sends a clear message that water companies must comply with their licence conditions,” he said.

Goska Romanowicz

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