Thames Water has agreed to forgo £86 million as a penalty for misreporting the number of properties at high risk of sewer flooding.
Ofwat says the misreporting, which occurred between 2005 and 2010, may have led to “poorly targeted and inefficient spending of customers’ money.”
However the regulator says it accepts the misreporting wasn’t deliberate and that the firm’s programme of improvements and maintenance did reduce the number of homes at risk.
Instead of levying a fine, which would have been paid to the Treasury, Ofwat has negotiated a package of penalties which will help customers.
As a result, Thames Water will pay an additional £2 million into a fund which assists customers who have difficulty paying their bills and invest an extra £5 million in community projects.
It has also agreed to a £79 million reduction in its regulatory capital value – a financial measurement used by Ofwat to cap prices – which will lead to lower bills for Thames’ 14 million customers “for years to come”.
Cathryn Ross, Chief Executive of Ofwat said: “We welcome Thames’s co-operative approach which means we have concluded our investigation more quickly and resulted in a better outcome for customers.
“We are satisfied that Thames has put right the problems that caused the misreporting. It’s only fair that when companies make mistakes, they put it right and make sure customers are not out of pocket.”
A spokesperson for Thames Water said: “We made a mistake in some of our 2009-10 sewer flooding statistics.
“Ofwat agree that this was not deliberate and we are pleased they have accepted our package of measures in response. This is a positive result for our customers, communities and the environment.”