Ofwat has opened an enforcement case into South East Water to investigate whether it has failed to develop and maintain an efficient water supply system.
Ofwat has opened an enforcement case into South East Water to investigate whether it has failed to develop and maintain an efficient water supply system.
The announcement follows the regulator calling in the Board of South East Water before Ofwat’s Chair and Chief Executive to explain its performance over the last 18 months.
In its latest Water Company Performance Report for 2022-23 published in September , Ofwat categorised South East Water as 'lagging behind' and required it to publish a service commitment plan by the end of November to address several areas of underperformance, including supply interruptions.
According to Ofwat’s Water Company Performance Report 2022-23, South East Water is the worst performer for supply interruptions in England and Wales in the first three years of the 2020-25 AMP7 period.
In 2022-23 there was an average 3 hours, 2 minutes and 21 seconds lost per property compared with its performance commitment level of 5 minutes and 45 seconds.
David Black, Ofwat CEO said:
“Providing reliable water supplies is at the heart of a water company's responsibilities. Too many customers have been failed too often by South East Water. That’s why we are now carrying out a thorough investigation into the company and its service to customers.
"We are clear that water companies must do more to regain public trust and it must start with better service. Where this does not happen, we will use all of our powers to ensure the sector delivers better value for both customers and the environment.”
Opening an investigation does not imply that Ofwat will conclude that there has been a breach or that the regulator will pursue formal enforcement action or impose a financial penalty.
In order to protect the integrity of the process, Ofwat will not be able to discuss the specifics of the case until the investigation has concluded.
On 31 October the Drinking Water Inspectorate (DWI) also separately informed South East Water that it is considering taking enforcement action to secure improvements to South East Water's supply system and ability to respond to incidents.
Ofwat said it will be working closely with the DWI to secure compliance in a way that addresses their joint concerns.
On 2nd October South East Water submitted its £1.9 billion AMP8 Business Plan for 2025-30 to Ofwat – the company’s most ambitious plan ever.
The company described the business plan as “the most important in its long history” because in the last few years, “it recognises that its service has not been of the high standard expected of it.”
Chief Executive David Hinton has said South East Water will need to raise significant new capital to fund the plan. The company has also expressed its concerns that “the investment framework Ofwat set out may not be sufficient to attract and retain equity capital investors.”
Responding to Ofwat’s announcement, South East Water said:
“We acknowledge the decision by Ofwat to open this investigation.
“Resilience forms a major focus for South East Water both now, and as a significant part of our PR24 business plan which has been submitted to Ofwat.
“We intend to fully cooperate with Ofwat on this matter.”
Mike Keil, Chief Executive of the Consumer Council for Water (CCW), commented:
“Customers’ trust and confidence in South East Water has been undermined by the company’s repeated poor handling of supply interruptions and we will do all we can to support Ofwat’s investigation. There was considerable anger and frustration among many people who felt unsupported, compounded by the company’s poor communication. Customers have a right to expect better from an essential service provider.”
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