Consumer group calls for change in Owfat position on £12.5m penalty

Thames Water is to be penalised for misreporting information and failing to pay compensation, but the Consumer Council for Water* is questioning the fine which hands over £12.5 million to the Treasury, as opposed to using it to benefit Thames customers.

In September 2007 Ofwat announced that it intended to fine Thames Water £12.5 million for providing inaccurate customer service information to the regulator which is ultimately used to set water prices, and failing to pay compensation to almost 8,000 customers, and it began a period of consultation so that the company and other interested bodies, including the Consumer Council for Water, and the public could comment.

In response to the consultation, the Consumer Council for Water agreed that Thames should be penalised but that customers should benefit rather than the Treasury. This view was also supported by other respondents, but by law any fine imposed by Ofwat must go to the Government.

David Bland, Chair of the Consumer Council for Water in London and the South East, said, “We accept that the company should be penalised but are disappointed that customers will not benefit if Ofwat continues along these lines.

“Water companies do not get revenue from tax payers therefore we feel strongly that Thames customers, not the Treasury should benefit from Ofwat’s decision, and that the fine should be drawn entirely from shareholders’ funds. We responded with these points to the first consultation and will do so again.”

London Assembly Conservatives announced their support for CCW’s stance. In response to CCW’s statement health spokesman, Elizabeth Howlett said, “It is right that if a water firm is fined for failing the consumer in someway, that fine should be spent in a way that benefits consumers and not simply disappear into the Treasury.

Ofwat has now started a second round of consultation for comment by Wednesday 6th February 2008.

*The Consumer Council for Water was set up in 2005 to provide a voice for water and sewerage consumers.

January 29, 2008