Fletcher challenges water companies in scathing letter

Ofwat chief executive Rachel Fletcher has sent a scathing letter to the bosses of water companies with a set of questions the regulator wants them to consider in the wake of the findings against Southern Water.

In her letter, which was sent out on Friday (28 June), Fletcher describes the publication of Ofwat’s findings as a “dark week” for the water industry.

Southern was found to have deliberately misreported its poor performance from 2010 to 2017.

As well as this, the company was found to have been responsible for sewage treatment failures.

Fletcher said she does not want to believe that the culture that existed in Southern Water is representative of the sector as a whole.

She also insisted that no one can “afford to be complacent”.

Fletcher added: “This week has shown again that the public’s trust in the water sector depends on companies behaving with integrity, honesty and transparency and nurturing a strong public service ethos throughout.”

Following this Fletcher set out the questions Ofwat expects bosses and their boards to consider and engage with customers.

They are:

• Are Ofwat’s findings against Southern Water, and the public reaction, widely understood across your business?
• How confident are you that the events in Southern Water could not happen in your company?
• How does your board test that the governance and assurance arrangements you have in place give you the right information about your performance?
• What do you do to encourage an appropriate culture in the organisation as a whole? How do you encourage your people to speak up if something is wrong?
• What are you doing to allow your stakeholders and especially those in the communities you serve, to help you understand the impact you are having?
• For example, could you provide more open access to raw performance data?
• Are you and your board plugged in to what influencers and customers are saying on social media?

Fletcher added that the regulator’s action sends out a message to the sector that it will not tolerate companies that show “scant regard” for their responsibilities to customers and the environment.

She also called on companies to expect Ofwat to “step up” the sanctions it imposes for similar breaches.

Following Ofwat’s “large-scale” investigation into the company which found serious failures in the operation of its sewage treatment sites, Southern was ordered to pay a record £126 million in penalties and payments to customers.

Ian McAulay, chief executive of Southern Water, told Utility Week that the water company needs to “improve relentlessly”.

The company could still be prosecuted by the Environment Agency.

He said the company has “got the balance sheet properly sorted” with customers, who are expected to get a rebate of at least £61 each, but it needs to do the same with the environment.

McAulay said as part of his transformational programme at Southern Water, it has created an “open and transparent” relationship with its regulators.