June 25, 2019 / 7:06 AM / a year ago

UPDATE 1-Britain's Southern Water to pay 126 mln stg for operational failures

(Adds Ofwat CEO quote, company statement, details)

June 25 (Reuters) - Britain's Southern Water on Tuesday apologised to its customers and agreed to pay 126 million pounds ($160.71 million) in fines and payments for operational failures at its sewage treatment plants and misreporting performance.

The Water Services Regulation Authority (Ofwat) said in a statement a large-scale investigation found that Southern Water failed to operate a number of wastewater treatments works properly, including by not making the necessary investment that led to equipment failures and spills of wastewater into the environment.

The Ofwat found Southern Water had manipulated its wastewater sampling process, which resulted in it misreporting information about the performance of a number of sewage treatment sites, meaning it avoided penalties under Ofwat's incentive regime.

"What we found in this case is shocking. In all, it shows the company was being run with scant regard for its responsibilities to society and the environment," Ofwat Chief Executive Rachel Fletcher said.

"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," Fletcher added.

Southern Water will pay a rebate of 123 million pounds to customers through their bills and pay a fine of 3 million pounds, the Ofwat said.

"We are deeply sorry for what has happened. There are no excuses for the failings that occurred between 2010 and 2017 outlined in Ofwat's report. We have clearly fallen far short of the expectations," Ian McAulay, Southern Water's chief executive, said here in a statement.

Southern Water, which appointed McAulay to undertake an ambitious transformation in 2017, said the failings were between 2010 and 2017.

Ofwat's move comes at a time when British utilities face the opposition Labour Party's renationalisation plan, prompting infrastructure owners to warn of damage to investment and high taxpayer costs.

The water utility, which was bought by a group of infrastructure funds led by JPMorgan from Royal Bank of Scotland in 2007, provides water and wastewater treatment in southern England counties, including Kent, Sussex, Hampshire and the Isle of Wight.

$1 = 0.7840 pounds Reporting by Noor Zainab Hussain and additional reporting by Tanishaa Nadkar in Bengaluru; Editing by Rashmi Aich

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