Letter from Ian McAulay, Chief Executive, Southern Water
Today, 9th July 2021, Southern Water accepted a sentence handed down by Canterbury Crown Court which included a fine of £90million. This sentencing followed Southern Water pleading guilty in March 2020 to historic offences of unpermitted discharges under the Water Resources Act and the Environmental Permitting Regulations, which happened between 2010 and 2015. The sentencing draws the investigation process by the Environment Agency into these historic discharges to a close.
As Chief Executive of Southern Water, and on behalf of the company’s board, I am deeply sorry for the historic failings that led to this sentencing and fine. I know that the people who rely on us to be custodians of the precious environment in southern England must be able to trust us. What happened historically was completely unacceptable and Southern Water pleaded guilty to the charges in recognition of that fact.
We have heard what the judge has said and will reflect closely on the sentence and his remarks. He has rightly put the environment front and centre which is what matters to all of us.
I regret that during this period Southern Water failed in its duty to protect customers and the environment. And I want to make clear that the fine will not impact customers’ bills, and investment in our transformation will not be reduced. Our shareholders are bearing the cost of the fine.
We are a changed company, with a new management team since 2017. We continue to transform culturally and operationally in order to protect our customers, the environment and our company and its employees. This includes:
• Our Executive Leadership Team overseeing the creation of a new Compliance and Asset Resilience Directorate and rolling out our ethical business framework across the company.
• Installing Event Duration Monitoring (EDM) technology across 98% of our network since 2017 – an industry-leading move which improves our understanding of the use of combined sewer overflows (CSOs) and helps target the right investment.
• Introducing our ‘Water for Life’ programme which over the next five years we expect to further reduce customer bills and provide additional support for vulnerable customers.
• Increasing our resources dedicated to reducing total leakage (targeting 15% by 2025 and 50% by 2040), water supply interruption (reduce the average time without water by 23% by 2025), and internal and external sewer flooding incidents affecting customers’ homes and outside areas (reduction of 20% by 2025).
• Developing and implementing one of the first Pollution Incident Reduction Plans (PIRP) and investing £32 million on improving bathing waters in the South East over the past five years which saw them achieve their highest ever ratings in DEFRA’s Bathing Water sampling range.
• In 2020-21, refocusing our baseline operations to further reduce pollution incidents and increase compliance through investment in capital maintenance, digitisation and incident response.
I understand that you may have further questions, and we are keen to ensure that we provide an opportunity for this. On 22nd July, I will be hosting a one-hour online session from 10-11am to answer your questions.
We will be in touch next week with further details of how to submit questions ahead of the session and with joining instructions.
In the meantime, please do not hesitate to get in touch.