Severn Trent Fined for Poor Service, Data Submission

Severn Trent Plc, the U.K.'s second- biggest water company, was fined a record 35.8 million pounds ($71.33 million) by water regulator Ofwat for providing false data and poor customer service.

The fine confirms the regulator's April proposal to charge the Birmingham, England-based utility for incidents between 2005 and 2007, Ofwat said today in a statement. The fine is a record for a U.K. water company, the regulator said in April.

``The size of the fine reflects how seriously Ofwat takes the deliberate misreporting of information,'' said Regina Finn, the regulator's chief executive officer. Companies are obligated to provide reliable and accurate data to protect consumers in a monopoly environment, Ofwat said.

The charge is unrelated to a separate Serious Fraud Office investigation in which the company was charged 2 million pounds yesterday for hiding data from Ofwat to avoid costly repairs in 2001 and 2002. It was the first U.K. water supplier to be charged by the SFO.

Severn Trent, which supplies water to more than 8 million people, said in a separate statement it's studying the decision and will respond in due course.

Water companies can be fined as much as 10 percent of their regulated revenue for poor service or failing to meet targets. The charge amounts to about 3 percent of the company's revenue from when the incidents occurred and will be borne by shareholders and paid to the treasury, Ofwat said.

Severn Trent said yesterday it will also start discussions with Ofwat concerning a March 2006 report that it submitted incorrect data in 2002 and 2004 that led to price limits being set too high and customers being overcharged. The talks may lead to further amends being made to customers, it said.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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